Software Firm New Relic to Go Private in $6.5 Billion Acquisition
Key takeaways
- Software company New Relic is going private after being bought out by two private equity firms for $87 a share
- The cash-only deal is set to complete by early 2024
- New Relic’s share price soared 13% at the news, which was part of its Q2 earnings beat
Is M&A activity officially back on the table after a long drought? The signs are pointing to ‘yes’ as another big merger enters the scene. Software company New Relic is set to be taken private by private equity firms TPG and Francisco Partners for a cool $6.5 billion. Wall Street liked the news, with New Relic shares up at news of the takeover. Here’s the lowdown.
The end of the deal drought could fuel an already red-hot tech market. You can get in on the action with Q.ai’s Emerging Tech Kit, which leverages AI to explore the weekly stats, forecast which tech stocks and ETFs could hit it out of the park, and reshuffle the Kit’s assets as market tides turn.
Download Q.ai today for access to AI-powered investment strategies.
What’s the New Relic merger?
New Relic, a cloud-based software company that helps apps with data analytics, is set to go private to the tune of $6.5 billion. That’s what the two private equity companies, TPG and Francisco partners, have agreed to pay in the cash-only deal.
The price translates to $87 a share, a 15% premium on the stock’s May 16 closing price, the day before when news of a potential deal first broke. The acquisition is set to complete by early 2024 at the latest, and there’s a 45-day window for other interested parties to make a takeover proposal.
New Relic’s CEO, Bill Staples, commented that with the takeover, New Relic “will have the resources and flexibility to not only complete the final chapter of this transition, but also accelerate our strategy and provide customers with a standardized data-driven practice”.
Wall Street’s reaction
The news came as part of New Relic’s earnings beat, which impressed investors with an annual revenue growth rate of 18%. It lagged behind its competitor Dynatrace, which saw a 25% climb in revenue.
New Relic shares skyrocketed at the deal announcement and the revenue increase, jumping 13% in a day and becoming one of the stock market’s biggest winners on Monday. Competitors also saw a boost to their share prices: Datadog was up 3.6% and Dynatrace rose by 2%.
The bottom line
It’s another hefty tech acquisition that Wall Street investors like the look of. As the competition heats up in the app data analytics sector, we could see New Relic’s competitors take on private equity investment.
You can dive into the choppy tech market waters without the stress thanks to Q.ai’s Emerging Tech Kit. It deploys AI to sift through the weekly numbers, anticipate the tech stocks and ETFs set to make waves, and rearrange the Kit’s holdings as the market churns.
Download Q.ai today for access to AI-powered investment strategies.