Managed services News
New Relic Exploring Potential Takeover Amid PE Firm Interest: Report
The potential takeover comes after New Relic announced in June that it appointed Kevin Galligan, a partner of Jana Partners, as part of a cooperation agreement.
Observability software developer New Relic is eyeing a potential sale of the company after garnering interest from private equity firms, Reuters reported Wednesday.
While no deal is certain, New Relic is looking to hire financial advisors, according to Reuters, which cited sources familiar with the matter.
When reached by CRN, a New Relic spokesperson said that the company was “unable to provide comment on this story since New Relic does not comment on rumors or speculation.”
New Relic stock increased slightly to $61.80 per share Thursday with a total market cap of $4.16 billion. The company may be worth $60 to $80 per share, according to Wall Street analysts, following the news of a potential takeover.
“We believe the discount is justified by New Relic’s slower growth and depressed margins and see shares as fairly valued,” wrote Erik Suppiger, a JMP Securities analyst.
Suppiger added that a strategic acquirer may be less likely, though companies like IBM or Oracle would be logical as an acquiring company.
New Relic shares were $62.59 per share Thursday morning, up more than 20 percent over the last five days.
The San Francisco-based software company was founded in 2008 and listed on the sNew York Stock Exchange in 2014.
In June it launched the New Relic Partner Stack program, replacing the former New Relic Partner Network, which provides partners with more training and accreditation programs, sales tools and resources, marketing campaigns and additional personnel support. The program’s goal is to help partners reach beyond reselling to providing services around New Relic software.
New Relic reported revenue of $786 million in its fiscal year 2022, an increase of 18 percent year over year. Though, its loss widened to $229 million from $171 million with its shares losing half of their value since November 2021.
The firm also reported 14,800 customer accounts in its most recent quarter, down from 15,400 in June 2020.
The potential takeover comes after New Relic announced in June that it appointed Kevin Galligan, a partner of Jana Partners, as part of a cooperation agreement. Jana Partners is known for pushing for a sale of the companies it takes a stake in, according to the report.