UPDATE, 5/8/13, 11:20 a.m. EDT: The names of Wachtell attorneys working on the matter have been added to the article’s eleventh paragraph.
Houston-based business software company BMC Software said Monday it has agreed to be acquired by an investment consortium led by buyout firms Bain Capital and Golden Gate Capital in a cash deal worth $6.9 billion.
The investor group, which also includes GIC Special Investments and Insight Venture Partners, will pay $46.25 for each share of BMC—a premium of 1.8 percent over the target’s Friday closing price.
CNNMoney’s David Goldman writes that the small premium is likely a reflection of BMC’s struggles to compete with larger software rivals like IBM and Hewlett-Packard, but he also notes that the offer price represents a premium of roughly 11 percent over BMC’s stock price before reports of a possible sale surfaced on September 28.
BMC makes business software used for a variety of functions including management of cloud computing and information technology services. The company had revenues of $2.2 billion in the fiscal year ending September 2012.
Under the terms of the agreement, BMC will have a 30-day "go shop" period, during which the company can solicit rival takeover bids. The deal is expected to close "later this year," according to BMC’s announcement, and is dependent on the approval of regulators and BMC’s shareholders.
The hedge fund Elliott Management, which owns a 9.6 percent stake in BMC, has agreed to vote in favor of the deal after pushing for a sale of the company since last year. "The transaction represents the culmination of an activist effort that began in the summer of 2012 with a successful proxy contest in which Elliott added two directors to BMC’s board," Elliott Management said in a separate statement.
Kirkland & Ellis is advising Bain and Golden Gate on the deal with a team led by corporate partners Sarkis Jebejian and Matthew Steinmetz in New York and Chicago, respectively. Corporate partners Matthew O’Brien, Jeffrey Richards, and Yi Claire Sheng are working on M&A matters while debt finance practice leader Linda Myers and corporate partner Michelle Kilkenney are working on financing aspects of the deal.
As The Am Law Daily has reported, Jebejian arrived at Kirkland in December, joining the thin ranks of partners to make a lateral move away from Am Law 100 counterpart Cravath, Swaine & Moore. Jebejian’s work before his move to Kirkland included representing Genpact on a $1 billion investment by Bain last summer.
Meanwhile, Kirkland counts both Bain and Golden Gate among its stable of frequent private equity clients. In October, the firm advised Bain on the $1.6 billion purchase of Apex Tool Group and the $1.34 billion acquisition of the call-center division of telecommunications company Telefónica. And, in February, Kirkland represented Golden Gate on its sale of Vistec Lithography to Raith GmbH for an undisclosed amount.
As for the other members of the investor group, Sidley Austin is advising GIC while Insight has turned to a team from Willkie Farr & Gallagher led by private equity chair Gordon Caplan and corporate partner Morgan Elwyn. Sidley’s team includes M&A partner Asi Kirmayer, tax partner Laura Barzilai, corporate partner Susan Lewis, regulatory counsel James Mendenhall, and M&A associate Tennie Tam. Partners Joel Mitnick and David Went are advising on antitrust matters.
Wachtell, Lipton, Rosen & Katz is advising BMC on its sale with a team led by corporate partners David Karp and Ronald Chen. Executive compensation and benefits partner David Kahan, antitrust partner Damian Didden, and tax partner Joshua Holmes are also advising. Associates on the deal are D. Miishe Addy, Nathaniel Asker, Lauren Gojkovich, Emily Johnson, Gregory Pessin, Michael Rosenblat, and Viktor Sapezhnikov.
BMC hired Wachtell last year and adopted a "poison pill" shareholder rights plan as a result of its proxy battle with Elliott, which increased its stake in the company in an attempt to force a sale. The two sides eventually reached an agreement in July that let Elliott add two members to BMC’s board.
BMC’s general counsel is Patrick Tagtow, a former Haynes and Boone attorney. Weil, Gotshal & Manges corporate chair Michael Aiello, along with associates Frank Martire and Allison Donovan, are representing Morgan Stanley in its role as financial adviser to BMC.
The deal for BMC is the latest of this year’s major leveraged buyouts to include roles for Kirkland and Wachtell. Last month, Kirkland entered the picture in the takeover battle for Dell Inc. by representing private equity firm The Blackstone Group in a bid for the computer maker it has since withdrawn. Wachtell represented Dell founder Michael Dell, who teamed up with Silver Lake Partners to take the company private in a proposed $24.4 billion deal.
Kirkland also landed a role advising Brazilian private equity firm 3G Capital, which joined with Berkshire Hathaway on a $28 billion purchase of H.J. Heinz Company, in February. Wachtell advised a special committee of Heinz’s board on that deal, while Willkie represented BofA Merrill Lynch in its role as Heinz’s financial adviser on that deal.