KKR to Acquire BMC Software from Investor Group

BMC Software (“BMC”), a global leader in software solutions for the digital enterprise, and KKR, a leading global investment firm, announced the signing of a definitive agreement under which KKR will acquire BMC. The company is being acquired from a private investor group led by Bain Capital Private Equity and Golden Gate Capital together with GIC, Insight Venture Partners and Elliott Management (collectively, the “Investor Group”).

Founded in 1980, BMC is a leading systems software provider which helps enterprise organizations manage and optimize information technology across cloud, hybrid, on-premise, and mainframe environments. Over the past 38 years, BMC has consistently expanded its scope alongside constantly evolving IT markets to address the ever-changing needs of the global enterprise. Today the company serves more than 10,000 customers worldwide, including 92% of the Forbes® Global 100. Recently, BMC was also recognized as one of America’s best employers for the third consecutive year by Forbes.

“With the support and partnership of our Investor Group, BMC significantly accelerated its innovation of new technologies and new go-to-market capabilities over the past five years,” said Peter Leav, President and Chief Executive Officer of BMC. “Our growth outlook remains strong as BMC is competitively advantaged to continue to invest and win in the marketplace. Our customers can expect the BMC team to remain focused on providing innovative solutions and services with our expanding ecosystem of partners to help them succeed across changing enterprise environments. We are excited to embark on our next chapter with KKR as our partner.”

“In an ever-changing IT environment that is only becoming more complex, companies that help simplify and manage this essential infrastructure for their enterprise customers play an increasingly important role,” said Herald Chen, KKR Member and Head of the firm’s Technology, Media & Telecom (TMT) industry team, and John Park, KKR Member. “With more than 10,000 customers and 6,000 employees, BMC is a global leader in managing digital and IT infrastructure with a broad portfolio of software solutions. We are thrilled to partner with the talented BMC team to accelerate growth—including via M&A—building on BMC’s deep technology expertise and long-standing customer relationships.”

KKR has a long record of supporting technology companies, having invested over $26 billion in the TMT sector in the last decade. KKR has experience with a number of enterprise systems software related investments, including Mitchell, Epicor and Calabrio. KKR is making the investment primarily from its twelfth Americas Private Equity investment fund.

“We have enjoyed working with and supporting Peter and the leadership team as they have propelled BMC’s technology forward to meet the changing needs of customers and the marketplace, and in the process positioned the business well for the future,” said Ian Loring, a Managing Director at Bain Capital Private Equity. “BMC has led innovation in their space and invested significantly in the product portfolio, and it has been gratifying to see the results in top line growth and enhanced competitive positions,” added David Humphrey, a Managing Director at Bain Capital Private Equity. Loring and Humphrey both serve on the BMC Board of Directors.

“We are very pleased with our successful partnership with BMC’s leadership team. Over the past five years, BMC has built upon its 38-year history of leadership in IT management solutions by adapting to industry shifts and innovating new tools that help transform customers into leading digital enterprises. Today, BMC’s solutions serve as the digital innovation and operations engine for thousands of customers worldwide. We are confident that BMC will continue this momentum and has a bright future ahead,” said Rishi Chandna, Managing Director at Golden Gate Capital and a member of the BMC Board of Directors.

Since going private in September of 2013, BMC has reallocated hundreds of millions of dollars toward higher growth R&D and go-to-market initiatives to address the massive digital disruption that is taking place in industries around the globe. In 2015, the company introduced its vision and strategy around Digital Enterprise Management that enables customers with a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mobile to cloud and beyond. As an extension of its strategy, BMC is helping companies accelerate their cloud adoption, and more specifically companies that have a cloud strategy that is based on multiple cloud providers.

Financing for the transaction is being provided by Credit Suisse, Goldman Sachs Bank USA, Jefferies Finance LLC, Macquarie and Mizuho Bank. The transaction, which is expected to close in the third quarter of 2018, is subject to regulatory approvals and other customary closing conditions.

Goldman Sachs & Co. LLC, Credit Suisse and Morgan Stanley & Co. LLC served as financial advisors to BMC. Kirkland & Ellis LLP is serving as legal counsel to BMC. Macquarie Capital is acting as exclusive financial advisor to KKR, with Simpson Thacher & Bartlett LLP serving as KKR’s legal counsel.