Informatica follows Dell, BMC Software, Compuware and Tibco into private equity takeover

Another technology company goes private

Data warehousing software company Informatica is to be acquired in a $5.3bn deal by private equity firm Permira and the Canada Pension Plan Investment Board. The company is the latest software vendor to fall to private equity in one of the biggest such deals.

It follows a bidding war between Permira and the Canadian pension board against a combination of Thoma Bravo - purchaser of Compuware last year - and the Ontario Teachers' Pension Plan.

It also follows the intervention of activist hedge fund group Elliott Management, which holds an eight per cent stake in Informatica, which wanted to "maximise shareholder value". In January this year, newswire Reuters revealed that another takeover of Informatica had fallen through, and the following month that it had hired financial advisers to help defend it against Elliott.

According to Reuters, Elliott approves of the deal and will vote in favour when it is put before shareholders.

Informatica was founded in February 1993 and is headquartered close to database maker Oracle in Redwood City, California. It is among a number of big-name software vendors that have gone private in recent years, as revenue growth from sales of packaged software (and services) dries up as many organisations look to cloud computing instead, with its lower up-front costs.

While Informatica has made its own move into cloud, the shift to a subscription-based model has put pressure on its profit margins.

Other big names going private include BMC Software, which was acquired for $6.4bn by Bain Capital and Golden Gate Capital in September 2013; Compuware followed a year later in a $2.5bn deal in an acquisition by Thoma Bravo, which has a portfolio of software companies under management; and Tibco, which was acquired by Vista Equity Partners in a $4.3bn deal, also in September 2014.

Hardware maker Dell, meanwhile, was taken private by its own founder Michael Dell in a deal part-financed by private equity. The $24.9bn buyout followed the intervention of activist shareholder Carl Icahn, who accused Michael Dell of trying to re-acquire the company he founded on the cheap. Dell was assisted by Silver Lake Capital Partners.