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Informatica to Go Private in $5.3 Billion Leveraged Buyout

The business software maker was under pressure from activist investor Elliot Management.

Business software maker Informatica said it would be bought for about $5.3 billion by private equity firms Permira Funds and Canada Pension Plan Investment Board (CPPIB), in the biggest U.S. leveraged buyout so far this year.

Informatica shareholders will get $48.75 per share in cash. The company’s shares rose 4.5 percent to $47.93 in early trading on Tuesday.

The stock rose 4 percent on Monday after Reuters reported that Permira/CPPIB and a partnership of Thoma Bravo and Ontario Teachers’ Pension Plan had submitted bids for Informatica.

Activist hedge fund Elliott Management disclosed an 8 percent stake in Informatica in January and said it was speaking to the company about ways to maximize shareholder value.

Reuters reported in February that Informatica was looking to hire financial advisers to help it defend itself from Elliott, after failing to sell itself in January.

Jesse Cohn, head of U.S. equity activism at Elliott told Reuters on Tuesday that the hedge fund supported the deal.

Technology companies have been targeted by activist investors as the sector evolves rapidly and older technology companies sit on large amounts of cash.

Informatica helps companies integrate and analyze data from various sources. It counts Western Union, Citrix Systems, American Airlines and Bank of New York Mellon among its customers.

Informatica competes with Tibco, which was taken private for $4.3 billion in December by private equity firm Vista Equity Partners.

“Informatica … is better positioned (than Tibco) to benefit from the adoption of cloud technologies,” Mizuho Securities analyst Abhey Lamba wrote in a note on Monday.

Redwood City, Calif.-based Informatica’s revenue rose 10.5 percent to $1.05 billion in 2014, while its pre-tax income jumped 21 percent to $170.3 million.

However, analysts have said the company’s shift to cloud and subscription revenue is pressuring margins.

Qatalyst Partners was Informatica’s financial adviser and Wilson Sonsini Goodrich & Rosati was legal counsel.

BofA Merrill Lynch, Goldman Sachs & Co, Macquarie Capital, and Union Square Advisors LLC were financial advisers to the Permira funds and CPPIB.

(Reporting by Devika Krishna Kumar and Greg Roumeliotis; Additional reporting by Liana Baker in New York; Editing by Simon Jennings and Richard Chang)

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