Investor Group Buys BMC for $6.9 Billion

BMC Software Inc. agreed on Monday to sell itself to a group of investors led by Bain Capital and Golden Gate Capital for about $6.9 billion, completing a campaign by an activist hedge fund to push the company into a deal.

Under the agreement’s terms, the buyers’ group â€" which includes the Government of Singapore Investment Corporation and Insight Venture Partners â€" will pay $46.25 a share in cash.

That represents a 14 percent premium to BMC’s share price on May 11, 2012, the last business day before the company disclosed that Elliott Management had taken a big stake â€" now up to about 9.6 percent â€" and was urging a sale. After initially resisting the activist fund, the two sides reached a compromise, with Elliott gaining two board seats and BMC beginning to explore a sale last fall.

A number of buyout firms emerged during the auction process over recent months, though by last week the Bain and Golden Gate consortium took the lead.

“After a thorough review of strategic alternatives, the BMC board of directors is pleased to reach this agreement, which provides shareholders with immediate and substantial cash value, as well as a premium to our unaffected share price,” Bob Beauchamp, BMC’s chairman and chief executive, said in a statement.

Jesse Cohn, the Elliott portfolio manager who led the firm’s campaign, added: “Elliott applauds the BMC Software board and executive leadership for delivering this value-maximizing outcome for stockholders, which both contains a go-shop provision and reflects what we believe is a substantial premium to BMC’s unaffected stock price.”

As part of the deal, BMC will have 30 days to try to find higher bids.

Credit Suisse, the Royal Bank of Canada and Barclays will provide debt financing.

BMC was advised by Morgan Stanley, Bank of America Merrill Lynch and the law firm Wachtell, Lipton, Rosen & Katz. The investors received financial advice from Qatalyst Partners, the boutique bank run by Frank Quattrone; Credit Suisse; RBC Capital Markets; and Barclays.

The investor group was counseled by Kirkland & Ellis and PricewaterhouseCoopers. GIC was also advised by Sidley Austin, while Insight Venture Partners was also advised by Willkie Farr & Gallagher.