While almost every technology company wants to go public to rake in money for its investors and research, sometimes it pays to go back into the private sector.
That’s what BMC Software has decided.
The company, which makes business service management solutions including BladeLogic, Remedy, ProactiveNet, MQSoftware, said Monday that it has struck a deal with a group of investors to be taken private for just under US$7 billion in the face of declining revenue.
“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,” chairman and CEO Bob Beauchamp said in a statement.
“BMC believes the opportunity to become a private company will provide additional flexibility and position us to invest more strategically to drive powerful innovation and deliver cutting edge customer solutions. We look forward to working closely with all parties to complete this transaction and enter into our next chapter of growth and industry leadership.”
Going private allows them a lot more control to restructure and do it far from the close scrutiny of Wall Street. And while the BMC deal isn’t finalized – it has to be approved by shareholders and BMC can solicit offers from others – it doesn’t have to paralyze the company in the interim. In fact, Pauley argued, Dell recently has been “re-energized” by its efforts to find a way to go private. “They have not taken their foot off the pedal at all,” he said, and not been distracted by the privatization effort.
“My hope would be BMC can accomplish something very similar.”
The problem is BMC “have tended to be kind of stale in terms of their offerings,” he said, “and they’re in a very crowded space that has shifted to the cloud.”
Companies that offer competing products include Cisco Systems Inc., CA Technologies, Citrix, EMC, Hewlett-Packard, IBM, Microsoft, Oracle and VMware.
According to a report in Bloomberg News, about 40 per cent of BMC’s revenue comes from the sale of software that manages IBM mainframes.
“BMC’s strength is they can take their data centre offerings and make them cloud offerings, then that’s a win all the way around because they have the expertise. Making the products work well in the cloud would be a great progression with them (and) keep up with the times.”