Permira backs $5bn takeover of IT giant

The deal is the largest leveraged buyout of the year so far

Permira, the London-based private equity group, has agreed to buy the big data software maker Informatica (Andy Rain/epa/Corbis)

Permira, the London-based private equity group, has agreed to buy the big data software maker Informatica in the largest leveraged buyout of the year so far. The deal, which Permira will fund jointly with the Canadian Pension Plan Investment Board (CPPIB), values the Californian tech company at $5.3bn (£3.6bn).

Informatica, which makes software that allows users to better manage and analyse large amounts of data, had been exploring sale options since January when it appointed investment banks to look into finding a buyer. With an offer largely priced into the market, Permira and CPPIB’s successful cash offer of $48.75 a share represented a premium of just 6 per cent on Monday’s closing price.

The decision to seek a buyer was sparked by the acquisition of about 8 per cent of Informatica’s stock by Elliott Management, the New York-based activist hedge fund run by Paul Singer that is currently involved in a spat with Alliance Trust, the 126-year-old British investment trust.

Elliott has also gained notoriety following its ongoing dispute with Argentina over its sovereign debt. Elliott increased its stake in Informatica in February to 9.4 per cent, after having instigated a review aimed at maximizing shareholder returns.

Informatica’s chairman and CEO, Sohaib Abbasi, said: “After careful consideration and deliberation of strategic alternatives, our board of directors unanimously concluded that the sale of Informatica to the Permira funds and CPPIB is in the best interest of all Informatica stakeholders.”

By modern technology standards the California-based Informatica is something of a veteran. It was founded in 1993, and has been run by Mr Abbasi since 2004.

Permira’s technology partner, Brian Ruder, said: “Informatica is an outstanding company and a clear leader in the essential field of enterprise data solutions. 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 in cloud integration, master data management, data integration for next generation analytics, and data security.”

The deal should be completed by the third quarter.