Tibco Said to Pitch Sale to Private Equity Amid Strategic Review

Sep 04, 2014 12:01 am ET

Sept. 4 (Bloomberg) -- Tibco Software Inc., which is being urged by an activist investor to explore a sale, has begun to pitch its business to private-equity firms as it reviews its strategic options, people with knowledge of the matter said.

The company, which makes software used by businesses, has approached firms including Bain Capital LLC and KKR & Co. to gauge their interest, the people said, asking not to be identified discussing private information. The Palo Alto, California-based company said in a statement yesterday that it’s working with Goldman Sachs Group Inc. and law-firm Wilson Sonsini Goodrich & Rosati on its review.

The presentations are a first step in a sale process that could still take months, the people said, and no offers have been made yet.

Tibco’s shares have fallen 30 percent in the past two years as revenue growth slowed to 4 percent in the latest fiscal year through November, from 22 percent in 2011. The company’s profit in the latest quarter fell short of estimates after sales of its Spotfire software were weaker than projected.

Representatives for the funds and Tibco declined to comment on the sale. Tibco’s shares rose more than 9 percent in extended trading yesterday after the announcement. Tibco ended regular trading with a market value of about $3.5 billion.

Activist Demands

Praesidium Investment Management Co., Tibco’s sixth-largest shareholder, sent a letter to the board on Aug. 12 seeking a sale of the company.

“We strongly believe that a rigorous, formal process is required in order for the board to make a fully informed decision in good faith regarding whether a sale, a stand-alone strategy or another alternative is in the best interests of the company’s shareholders,” Praesidium, which owns about 3.2 percent of Tibco, wrote in its letter last month.

Tibco’s directors began a review on Aug. 16 of “a variety of strategic and financial alternatives available to the company,” Tibco said in yesterday’s statement.

“Following a detailed evaluation over the past several months, we have determined that it is prudent to undertake a wide review of strategic and financial options to see which alternative or alternatives, including our standalone plans, are in fact the best way to maximize shareholder value,” Vivek Ranadive, Tibco’s chief executive officer, said in the statement.

--With assistance from Jack Clark in San Francisco.