BMC Software sold-on by private equity owners to KKR in $8.5bn deal

Bain Capital and Golden Gate sell BMC making estimated $1.6bn profit

BMC Software has been sold by its private equity owners Bain Capital and Golden Gate Capital to KKR & Co in a deal that values the company at $8.5 billion, according to Reuters' sources.

The sale comes five years after the two private equity companies took the systems management software vendor, founded in 1980, private in a $6.9 billion deal following a number of years of somewhat moribund financial performance.

KKR pioneered leveraged buyouts financed with so-called junk bonds in the 1980s. However, it was stung in the recession of the early 1990s following its highly leveraged buyout of food firm Nabisco. That took it out of the market for some time.

More recently, though, it has turned its attention to technology companies, investing more than $26 billion in the sector over the past decade. Its BMC Software buyout is its biggest since the global financial crisis in 2008. Its most high-profile tech sector investment is arguably Epicor, the manufacturing software company it acquired for $3.3 billion in mid-2016.

"With the support and partnership of our investor group, BMC significantly accelerated its innovation of new technologies and new go-to-market capabilities over the past five years," claimed BMC CEO Peter Leav.

Since 2013, the company has switched its focus from packaged software towards faster growing markets, particularly cloud computing, and supporting cloud computing environments and enterprise digital transformation initiatives.

Leav added that the takeover wouldn't mean major change for the company, the development of its products, or its customers: "Our growth outlook remains strong as BMC is competitively advantaged to continue to invest and win in the marketplace.

"Our customers can expect the BMC team to remain focused on providing innovative solutions and services with our expanding ecosystem of partners to help them succeed across changing enterprise environments. We are excited to embark on our next chapter with KKR as our partner."

BMC claims more than 10,000 customers worldwide, including 92 of the Forbes Global 100.

"In an ever-changing IT environment that is only becoming more complex, companies that help simplify and manage this essential infrastructure for their enterprise customers play an increasingly important role," said Herald Chen, KKR member and head of the firm's Technology, Media & Telecom (TMT) industry team.

The transaction is being financed by Credit Suisse, Goldman Sachs Bank, Jefferies Finance, Australia's Macquarie and Japan's Mizuho Bank. The transaction is expected to close in the third quarter of 2018.