Tibco on Monday said it will go private in a deal valued at $4.3 billion so it can focus on its longer term strategy that wades into everything from embedded business intelligence to enterprise social networking and marketing software.
In a statement, Tibco said that it will be acquired by Vista Equity Partners in a deal valued at $24 a share, or $4.3 billion including debt. Vista's offer was a 26.3 percent premium to Tibco's closing price on Sept. 23. Tibco reportedly had multiple offers.
Tibco had been evaluating its options. Tibco has a solid middleware and messaging business, but was unlikely to please Wall Street on a quarterly basis as it made numerous business transitions. In other words, Tibco's strategy to provide "the right information, at the right time, in the right context" was going to take more than a few quarters to bake.
Wedbush analyst Steve Koenig said that Tibco's recent quarters meant that the company would have been in the penalty box for a while. Koenig said:
Tibco has had several execution missteps over the last six quarters, which affected its North American infrastructure business early in this time period and, most recently, its Spotfire business. Although we think Spotfire is poised to take market share from BI incumbents in the long term, we don’t expect Spotfire to grow meaningfully in the next few quarters, due to potential disruption from operational changes by Tibco to enable longer-term growth.
Tibco’s execution variability since mid-FY12 has shaken our confidence in the company’s ability to grow its revenue and earnings consistently, and we think Spotfire is facing heightened competitive challenges from Tableau in the analytics market. Also, our checks with integrators suggest that TIBX’s window to the market has gradually been narrowing as more enterprise standardize on stacks from the majors. Less importantly, we believe the bear argument that Tibco's relevance is suffering from the shift to cloud computing has some validity, as our checks suggest SaaS integrations have not commonly employed real-time application-level technologies, and Tibco lags behind more cloud-focused upstarts in providing real-time tools for the integration of cloud-based applications.
Analysts said in research reports that it's unlikely another bidder would chase Tibco.
What remains to be seen is whether Tibco can be more aggressive as a privately held company. Dell is an example of a company that has become more forward looking and approachable since going private. BMC also has larger plans. However, private equity can also swap research and development spending for debt and dividends to shareholders.
Vista Equity Partners has a series of software companies in its portfolio, but Tibco would represent one of its largest enterprise plays. Vista owns Sumtotal as well as Websense. Sumtotal is a notable human capital management player and Websense is a security vendor. Vista's most fun portfolio company is STATS, which provides sports data, technology and content to sports leagues and broadcasters.