Thoma Bravo has agreed to buy enterprise software company Anaplan for $10.7bn, just days after two hedge funds teamed up with a shareholder to launch an activist campaign against the San Francisco-based business.
The leveraged buyout at $66 per share, a 30 per cent premium on Friday’s closing price, follows a flurry of private equity-led deals in the software sector.
The deal was announced after Sachem Head Capital Management and Corvex Management last week disclosed they had built a stake in the UK-founded company alongside JS Capital Management, a fund run by Jonathan Soros, the son of billionaire financier George Soros, and an existing shareholder.
The three investors, which own nearly 9 per cent of Anaplan’s outstanding shares, formed a consortium on March 7 and notified chief executive Frank Calderoni of their intention to nominate four members to the board. On Thursday, the group disclosed its campaign in a securities filing.
Anaplan and its board of directors have instead agreed to go private following a steep plunge in technology stocks driven by fears of rising interest rates and Russia’s invasion of Ukraine. The Thoma Bravo deal priced the company at the level at which it traded in autumn 2021.
Anaplan provides forecasting software to businesses and was founded in 2006 in the UK and went public in 2018.
Thoma Bravo, one of the private equity industry’s most active investors, is a specialist in buying software companies and has signalled it intends to retain Anaplan’s management.
The firm sidestepped investment banks to arrange a multibillion-dollar financing package from a consortium of private capital providers including Owl Rock Capital, Blackstone, Apollo Global and Golub Capital.
The deal follows a flurry of private equity-led takeovers in the software sector, including the $14bn buyout of cyber security company McAfee by Advent International and Permira, which was completed this month, and the $16.5bn takeover of Citrix by Elliott Management and Vista Equity in January.
The Anaplan acquisition indicates that big leveraged buyouts will continue at a brisk pace in 2022, despite the war in Ukraine and fears that banks will curtail financing for takeovers as market volatility rises.
Private lenders have taken market share from banks to finance big buyouts in recent years, such as Thoma Bravo’s $6.6bn takeover of Stamps.com in 2021. Bankers say private lenders can offer higher leverage ratios on deals and greater discretion, though interest rates may be higher.
The Anaplan deal would be the largest LBO to bypass bank financing, which is traditionally supplied by lenders such as JPMorgan, Goldman Sachs and Bank of America.
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“We are thrilled to partner with Thoma Bravo to build on the strength of our innovative platform and capitalise on the massive opportunity and incredible demand we are seeing,” said Calderoni.
“We look forward to working closely with Anaplan’s talented and experienced team,” said Tara Gadgil, a partner at Thoma Bravo.
Sachem Head is led by Scott Ferguson, a protégé of Pershing Square’s Bill Ackman, and Corvex is headed by Keith Meister, who previously worked for activist investor Carl Icahn.
Soros, who previously worked at his father’s Soros Fund Management, oversees a $2.2bn portfolio of US stocks, according to filings.