Observability Vendor New Relic Going Private In $6.5B Acquisition
Francisco Partners and TPG are buying the observability platform developer for $87.00 per share in a deal announced Monday.
Unified data observability platform developer New Relic is being acquired by private equity firm Francisco Partners and asset management firm TPG in a deal valued at $6.5 billion, New Relic said Monday.
New Relic, now publicly traded on the New York Stock Exchange, will become a privately-owned company under the deal “with enhanced flexibility to continue investing in its leading observability platform and meeting the data and efficiency needs of its customers,” New Relic said in a statement.
Francisco Partners and TPG will pay $87.00 per share in the all-cash deal to buy New Relic. That represents a premium of approximately 26 percent over New Relic’s 30-day, volume-weighted average closing price ending July 28, New Relic said in a statement. And it’s an approximately 30 percent premium to New Relic’s 12-month, volume-weighted average closing price.
New Relic shares, which closed at $74.05 per share on Friday, opened Monday at $84.00 following the acquisition announcement and hovered at that price throughout the day. New Relic shares closed at $83.99 Monday, up $9.94 or 13.42 percent from Friday.
The market value of the San Francisco-based company stands at $5.898 billion.
“New Relic has made significant progress on its consumption business transition and, together with Francisco Partners and TPG, we will have the resources and flexibility to not only complete the final chapter of this transition, but also accelerate our strategy and provide customers with a standardized data-driven practice that any company can benefit from,” New Relic CEO Bill Staples said in the statement announcing the acquisition deal.
“I am proud of all that the team at New Relic has achieved, and I thank each of our employees for executing in a dynamic market and contributing to our continued success,” Staples said.
Reports circulated a year ago that New Relic was eyeing a potential sale after attracting interest from private equity firms.
The transaction has been approved by New relic’s board of directors and by leading shareholders Lew Cirne (New Relic’s founder and executive chairman), JANA Partners LLC and HMI Capital Management L.P., which collectively own approximately 20 percent of New Relic outstanding shares. As part of the transaction Cirne will be rolling over approximately 40 percent of his beneficial shareholdings, the company statement said.
The transaction is expected to close in either late 2023 or early 2024. It is subject to shareholder approval and customary closing conditions and regulatory approvals. The agreement also includes a 45-day “go-shop” period during which New Relic can entertain other acquisition offers.
“As technology continues to become more feature rich and AI-enabled, the need for visibility is only increasing,” said Nehal Raj, co-managing partner of TPG Capital, in a statement. “New Relic is a pioneer in the observability market, providing developers and engineers with a unified platform to proactively monitor and manage mission critical applications.”
On Monday New Relic also announced the results for its fiscal 2024 first quarter (ended June 30) including revenue of $242.6 million, up 12 percent from $216.5 million in the first quarter of fiscal 2023. The company reported a $33.3 million net loss for the quarter compared to a $56.3 million net loss one year earlier.
On June 28, New Relic said it was laying off up to 225 employees or about 10 percent of the company’s workforce.