Software maker New Relic (NYSE: NEWR), one of the largest software makers in Portland, is going private in a $6.5 billion deal.
The company, which is based in San Francisco but has its engineering headquarters in downtown Portland, is being acquired by private equity firms Francisco Partners and TPG for $87 per share. The all-cash deal represents a premium of 26% to the company’s 30-day volume-weighted share price.
“Moments ago, we announced that we’ve agreed to become a private company through a transaction with two of today’s most experienced and successful technology investors, Francisco Partners and TPG,” New Relic CEO Bill Staples told employees in a memo Monday morning. “This news is the beginning of an exciting new chapter for New Relic, and a testament to your tireless efforts.”
The move to go private comes after months of speculation that a deal was in the works and a year after New Relic became the target of activist investor Jana Partners. New Relic went public in 2014.
The deal isn’t expected to close until late 2023 or early 2024. New Relic has a 45-day “go-shop” period to solicit other proposals. However, this deal was the result of a “comprehensive process” that included talking to potential financial and strategic partners and included the company’s two largest public shareholders, said lead independent director Hope Cochran in a press release.
“The board is unanimous in its belief that today’s transaction appropriately reflects the company’s innovative and strong business while maximizing shareholder value, and I am immensely proud to have worked alongside New Relic’s outstanding management team and my fellow directors to transform New Relic at this pivotal time,” said Cochran.
Company founder and Executive Chairman Lew Cirne is rolling over 40% of his shareholdings as part of this deal and will remain invested in the company, according to company filings.
In an FAQ for employees, the company noted that it remains business as usual for the company.
Last month New Relic announced restructuring plans that cut 255 roles. It has gone through several rounds of downsizing since 2021.
Addressing the possibility of more layoffs or office closures, the company told employees it is committed to being transparent to inform the team of changes as appropriate. Management also noted that the new buyers “are excited to partner with our talented team.”
“Following our restructuring, we are confident that we have the right team in place to help us achieve our goals and we expect to continue to rebuild our headcount, hire for open positions, and invest in our growth and our people,” according to an employee FAQ.
New Relic makes software that helps customers monitor their software applications. Leading up to its IPO in 2014 and for several years after, the company was a central pillar of the Portland tech community for talent as well as hosting events at its office in Big Pink.
However, the company’s growth slowed, competition increased and it has spent the last serval years transitioning its business model to a consumption-basis.
According to the Business Journal's 2021 list of largest software development firms in Oregon, New Relic had 613 employees in the region, out of a global workforce of 2,249. The company has not released its local headcount numbers.
In April the company announced it is significantly cutting its global real estate footprint. The company has gone from occupying four floors with a lease for two more to occupying just two floors of U.S. Bancorp Tower.
Investors were pleased with the acquisition announcement and sent shares soaring more than 13% in late-morning trading.
