New Relic, a software company, has agreed to a $6.5 billion acquireout — a San Francisco tech megadeal between a 15-year-old firm and two local private equity giants.
Francisco Partners and TPG, major private equity firms based in San Francisco with deep ties to the tech sector, orchestrated the acquireout deal.
New Relic creates data products for engineers to utilize to manage their software. The company went public in 2014 and is based at 188 Spear St. in downtown San Francisco. Its stock jumped by 13% on Monday after news broke about the acquisition, but former “Relics” won’t cash in on the deal if they dumped their company shares on their way out of the firm over the past month.
The 200-plus worker “restructuring,” as CEO Bill Staples called the job cut in late June, was New Relic’s third layoff round in three years. At the time, he struck an optimistic tone about the company’s future and path to profitability but built no mention of the impfinishing deal. Reuters reported in May that Francisco Partners and TPG had finished talks to acquire New Relic after failing to find enough funding to afford the valuation, but the two private equity firms clearly came back to the table.
The acquireout, aimed to be finalized late this year or early next, would deliver New Relic shareholders $87 a share and take the company off the public markets. Though New Relic isn’t profitable, its steady growth and job cuts may have appealed to the investment giants. The company has 45 days to shop around for other offers, the acquisition terms declare.
Francisco Partners, founded in Menlo Park but based in San Francisco, has put money into a variety of tech startups, including Zocdoc, Eventbrite and GoodRX. TPG, which boasts $137 billion in assets and is also based in the city, has invested in Airbnb, Spotify and Uber.
“This alter in ownership does not alter our strategy, who we are or how we do business or with you,” Staples wrote in a published note to customers on Monday. Private equity firms generally utilize debt to acquire companies they believe can be improved and later sold, in parts or in whole, for a profit.
The acquireout, if it goes through, will be a windfall for New Relic founder and anagrammer Lew Cirne, who, according to a June filing, still owns 10% of the company. Monday’s announcement declared Cirne would roll over 40% of his shares into the private firm.
New Relic declined an SFGATE request for comment.
Hear of anything happening at New Relic? Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.
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