This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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Informatica, the mid-sized provider of business intelligence software, could be preparing for a bid amid sector consolidation, industry sources and analysts told mergermarket.
While shares of the Redwood City, California-based company have gained nearly 50% over the past year and fourth-quarter net income surged 48%, corporate actions in the past week indicate CEO Sohaib Abbasi might be taking preventive measures. Informatica’s market capitalization is USD 1.6bn and its enterprise value is USD 1.36bn.
This week, the company amended the severance agreements of CFO Earl Fry and two EVPs in case of a change in control. Analyst Pat Walravens of JMP Securities said similar practices by four other companies including Siebel Systems were followed by a takeover, usually within a year.
Fry did not respond to a telephone call. He was scheduled to meet investors Tuesday at an investor conference in San Francisco. Informatica representatives also did not return calls.
Two industry bankers said, however, that unlike Siebel Systems - which was acquired by Oracle - Informatica has been blessed by good performance and share price, with few hedge fund or activist investors. To be sure, both said Abassi might acknowledge the inevitable and make Informatica as attractive as possible to a buyer. “This kind of action is not taken for no reason,” one said.
Two other software bankers suggested larger technology companies such as listed Hewlett-Packard, Teradata or Microsoft, as well as privately held SAS Institute, might target Informatica because of its attractive client list and appeal to providers of business software.
Over the past year, larger rivals including listed Hyperion Solutions, Business Objects of France and Cognos of Canada have all agreed to be acquired respectively by Oracle, SAP of Germany and IBM.
Informatica last week elected Hyperion’s last CEO, Godfrey Sullivan, to its board. Sullivan also serves as a director of listed Citrix Systems, with a market capitalization of USD 6.5bn.
Informatica has long had close banking ties to both Credit Suisse and Morgan Stanley, which underwrote share sales. But in recent acquisitions, such as the 2006 purchase of privately held Itemfield of San Mateo, California for USD 55m, it has not hired outsiders. The company’s counsel is Wilson Sonsini Goodrich and Rosati. Wilson Sonsini partner Mark Bertelsen is an Informatica director.
The company previously reported fourth quarter net income of USD 20.6m, compared with USD 13.9m a year ago, as revenue rose 24% to USD 113.9m.
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