The Deal: BMC Software in $6.9 Billion Deal Validates Singer's Pressure

Tickers in this article: BMC

NEW YORK (TheDeal) -- Houston-based software company BMC Software Inc. announced Monday it will be acquired by a group of investors for $46.25 per share, or $6.9 billion.

The listed-company will be sold to an investor consortium that includes private equity firms Bain Capital LLC and Golden Gate Capital, as well as venture capital firm Insight Venture Partners and sovereign wealth fund Government of Singapore Investment Corp. Pvt. Ltd.

The sale comes nearly a year after activist investor Paul Singer's hedge fund, Elliott Management Corp., began proposing new directors for the software company and agitating for a sale on the basis that BMC had underperformed compared to equities benchmarks.

Last July, Elliott Management dropped its bid to install four directors when BMC agreed to expand its board to 12 directors. The company is led by CEO Bob Beauchamp.

According to the statement released by the company and the private equity firms, Elliott Management has agreed to vote its 9.6% stake in favor of the transaction.

Shares of BMC were little changed at $45.42.

Singer's hedge fund has repeatedly challenged tech companies it accused of underperforming; earlier this year, Compuware Corp., a Michigan-based software company, rejected Elliott's $2.3 billion take-private bid, saying it was too low. In February, however, Elliott signed a two-year confidentiality agreement and a standstill until May 15, which limits its stake to just under 10%; the hedge fund holds about an 8.8% share in Compuware. BMC's go-shop will last 30 days.

There is no financing condition associated with the transaction. Credit Suisse Group, RBC Capital Markets LLC and Barclays plc agreed to provide debt financing.

Morgan Stanley and Bank of America Merrill Lynch are financial advisers, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to BMC. A team from Weil Gotshal & Manges LLP represented Morgan Stanley including Michael Aiello, Frank Martire and Allison Donovan.

A Kirkland & Ellis LLP team that included Sarkis Jebejian, Matthew Steinmetz, Matthew O'Brien, Jeff Richards, Claire Sheng, Linda Myers and Michelle Kilkenney provided legal counsel to Bain and Golden Gate. Willkie Farr & Gallagher LLP's Gordon Caplan and Morgan Elwyn were legal advisers for Insight Venture Partners. PricewaterhouseCoopers LLP served as accounting adviser to the investor group.