TPG and Francisco Partners Are Taking Private New Relic for $6 Billion in an All-cash Deal

A consortium led by Francisco Partners, alongside private equity group TPG, has announced their intention to acquire software provider New Relic in a cash transaction, offering $87 per share. This offer values the company at nearly $6.5 billion. The announcement, made on Monday, resulted in a 14% pre-market trading surge for New Relic shares, driving the price to over $84 per share. The proposed offer represents a significant 26% premium over New Relic's 30-day volume-weighted average closing price, as stated by the company.

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New Relic specializes in creating software that aids in monitoring website and application performance. The deal is projected to be finalized by early 2024, marking a return to private ownership for New Relic almost nine years after its initial debut on the New York Stock Exchange in 2014.

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Founder and executive chairman of New Relic, Lew Cirne, expressed his satisfaction in partnering with Francisco Partners and TPG, emphasizing their commitment to building upon the company's robust foundation and realizing its full potential, according to a press release.

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It should be noted that earlier discussions regarding the deal between Francisco Partners, TPG, and New Relic had faced challenges in securing sufficient debt financing to meet the desired valuation. However, these hurdles have now been overcome, and the revived deal was announced alongside New Relic's latest earnings report. Major shareholders, including Lew Cirne and activist hedge fund Jana Partners, have endorsed the transaction.

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The deal includes a 45-day "go-shop" period for New Relic, during which the company has the opportunity to entertain offers from other qualified bidders.

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TPG, an alternative asset manager, has a notable presence in the technology sector, with investments in prominent companies like Airbnb, Box, and Zscaler.

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Francisco Partners, a technology-focused private equity firm, boasts a history of successful investments in companies such as Barracuda Networks, On Semiconductor, and K2. Over the years, the firm has successfully taken other cloud and IT companies private, including a $17 billion acquisition of Sumo Logic and a 2018 deal for payment technology company Verifone.

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