Home Hedge Funds Exclusive: Francisco Partners, TPG end talks to buy New Relic

Exclusive: Francisco Partners, TPG end talks to buy New Relic


NEW YORK, May 26 (Reuters) – Private equity firms Francisco Partners and TPG Inc (TPG.O) have ended talks to acquire New Relic Inc (NEWR.N) after they failed to secure enough debt financing and could not meet the business software company’s valuation expectations, people familiar with the matter said.

The demise of the deal negotiations underscores the challenges facing private equity firms seeking to put together leveraged buyouts.

High interest rates have made debt more expensive, while concerns about an economic slowdown have made lenders more risk-averse, especially when it comes to financing technology companies such as New Relic that have strong revenue but limited cash flow.

New Relic has been negotiating with potential acquirers since last year, Reuters has reported, and it’s possible that deal talks resume some time in the future, the sources added.

The gap in the deal price expectations between the parties could not be learned. Shares of New Relic dropped 5% to $73.65 in Friday afternoon trading, giving the company a market value of about $5 billion.

The sources requested anonymity because the matter is confidential. New Relic and Francisco Partners did not immediately respond to requests for comment, while TPG declined to comment.

San Francisco-based New Relic develops cloud-based software to help websites and application owners track the performance of their services. Founded in 2008, the company listed in 2014.

New Relic has previously been targeted by several activist hedge funds including Jana Partners, Engaged Capital and Eminence Capital. Last year, Jana won representation on New Relic’s board.

Reporting by Anirban Sen and Milana Vinn in New York; Editing by Greg Roumeliotis and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

Anirban Sen

Thomson Reuters

Anirban Sen is the Editor in Charge for U.S. M&A at Reuters in New York, where he leads the coverage of the biggest deals. After starting with Reuters in Bangalore in 2009, Anirban left in 2013 to work as a technology deals reporter in several leading business news outlets in India, including The Economic Times and Mint. Anirban rejoined Reuters in 2019 as Editor in Charge, Finance to lead a team of reporters, covering everything from investment banking to venture capital. Anirban holds a history degree from Jadavpur University and a post-graduate diploma in journalism from the Indian Institute of Journalism & New Media.
Contact:+1 (646) 705 9409

Milana Vinn

Thomson Reuters

Milana Vinn reports on technology, media, and telecom (TMT) mergers and acquisitions. Her content usually appears in the markets and deals sections of the website. Milana previously worked at GLG and PE Hub, where she spent several years covering TMT deals in private equity. She graduated from CUNY Graduate School of Journalism with Masters in Business Journalism.
Contact: 347-463-7957

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