Silver Lake Partners, the US private equity firm, on Friday sealed the latest buy-out in the software industry when it agreed to acquire Serena Software for $1.2bn in cash.
Silver Lake, one of the most prominent buy-out funds based in Silicon Valley, is paying Serena shareholders $24 per share - only a small premium to its market value on Thursday night. Serena shares edged up almost 1 per cent to $23.86 in early trading in New York on Friday.
Serena is an infrastructure software provider whose clients include some of the largest US blue-chips such as General Electric. Mark Woodward, the company’s chief executive, said on a conference call that the decision to go private would free it from the “quarterly grind“.
“It will give us the flexibility to execute our strategy and emerge as a strong company in the long term,“ he said.
For years, private equity investors had been reluctant to put money into software companies, for fear that the lack of predictability in their cashflow meant they could not withstand the high level of debt typical in buy-outs.
But those concerns have dissipated recently, prompting a number of large private equity deals in the software industry. In one example early this week, Golden Gate Capital agreed to buy Canada’s Geac Computer Corporation for $1bn.
Morgan Stanley advised Serena, which formed a special committee of directors to evaluate the bid. Merrill Lynch and Lehman Brothers advised Silver Lake.