New Relic to Go Private in $6.5 Billion Acquisition Deal by Francisco Partners & TPG
July 31, 2023: New Relic, a leading software company specializing in application performance monitoring, is set to become a private company in a significant acquisition deal by global investment firms Francisco Partners and TPG. Here’s a breakdown of the critical details:
Acquisition Deal: Francisco Partners and TPG have entered into a definitive agreement to acquire New Relic for $87.00 per share in cash, valuing the company at approximately $6.5 billion. This all-cash transaction offers shareholders a premium of roughly 26% to the 30-day volume-weighted average closing price and around 30% to the last-twelve-months volume-weighted average closing price.
New Relic’s Strengths: New Relic’s cloud-based software enables websites and mobile apps to monitor servers, databases, and user interactions, enhancing efficiency for businesses seeking to optimize resources.
Competitive Landscape: The move comes amid stiff competition from rival software companies like Datadog and Dynatrace in the application performance monitoring space. While New Relic reported a robust annual revenue growth of about 18%, Dynatrace’s growth stood at 25%, and Datadog’s sales surged by 63% in 2022.
Market Response: Following the acquisition announcement, New Relic’s shares experienced a positive uptick of approximately 13%, reaching $83.85.
Growth Opportunities: The acquisition aims to provide New Relic with enhanced flexibility to continue investing in its leading observability platform and cater to its customers’ data and efficiency needs. Francisco Partners and TPG expressed confidence in New Relic’s unique position in the evolving technology industry.
New Relic’s Perspective: The company’s management expressed enthusiasm for the partnership, emphasizing the resources and opportunities to accelerate its business strategies and deliver standardized data-driven practices to customers.
Investor Support: The acquisition deal received support from New Relic’s board and shareholders, who believe it appropriately reflects the company’s innovative business and maximizes shareholder value.
Practical Takeaways for Investors:
- Monitor Acquisition Progress: Stay informed about the acquisition process and its potential impact on New Relic’s business strategies and product offerings.
- Assess Market Competitiveness: Evaluate New Relic’s market position in the application performance monitoring industry and how it compares to competitors like Datadog and Dynatrace.
- Analyze Growth Potential: Consider the growth opportunities and potential of New Relic’s observability platform under the ownership of Francisco Partners and TPG.
- Keep an Eye on Shareholder Value: Keep track of how the acquisition aligns with the interests of shareholders and how the company’s profitability evolves in the private setting.
New Relic’s agreement to go private in the $6.5 billion acquisition deal represents a significant milestone for the company and offers opportunities for growth and innovation in the dynamic technology landscape.
