Big data attracts $5.3bn buyout for Informatica

The European private equity group Permira has teamed up with Canada's largest pension fund to acquire Informatica, the US data software company, in a $5.3bn deal that marks the largest leveraged buyout so far this year.

The Canada Pension Plan Investment Board and Permira will pay $48.75 a share in cash to take Informatica private, valuing it at $5.3bn, the company said on Tuesday.

Permira and CPPIB's offer would be a 6.5 per cent premium to the stock's closing price on Monday. The shares have risen a fifth year to date.

The takeover would fit in with the strategy of Elliott Management, which has built up a nearly 10 per cent stake in Informatica, a maker of 'middleware' which is used by businesses to integrate their data, in recent months.

Elliott has often pushed software companies to sell themselves to private equity after taking a stake in them, ruffling feathers on corporate boards across Silicon Valley.

Past targets for the hedge fund's technology company activism over the last two years include Riverbed Technology and BMC, both of which eventually found private equity owners.

Buyout firms, meanwhile, have spied an opportunity in taking over mature middleware providers whose products give them steady cash flow, but are unloved by public stock markets.

Redwood, California-based Informatica, which reported $1bn in sales last year, has sought to expand by selling integration for newer markets including big data, cloud-computing and data security.

"We are very excited about the company's ongoing transition to cloud and subscription based services, as well as its continued pursuit of four separate billion-dollar market opportunities," said Brian Ruder, a partner at Permira.

The company reported $211m in earnings before tax, interest payments, depreciation and amortisation in 2014.

The deal's size will also raise hopes that classic leveraged buyouts could make a comeback after a lacklustre start to the year.

Less than $30bn in private equity takeovers were announced in the first quarter, the lowest level since early 2009.

Many firms have been focused on exiting previous investments at a time when stock-market valuations are high.

New forms of relatively debt-free private equity investment, such as 3G Capital's merger of Heinz with Kraft last month, have also emerged while leveraged mega-buyouts typical before the financial crisis have receded.

The year's previous largest buyout was Life Time Fitness, a gym chain acquired last month by Leonard Green and TPG for just over $4bn.

Informatica would be Permira's largest investment to date within its fifth buyout fund, which it finished raising in June last year.

Over a third of the firm's investments since 1997 have been in technology companies.

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