BMC set to go private in $6.9 billion deal

BMC’s announcement that it will be acquired by a private investment consortium could prove to be a wise decision, since it will allow the vendor to evolve its IT systems management business without the same financial pressures faced by public companies.

The acquisition is headed by Bain Capital and Golden Capital and worth about US$6.9 billion, according to BMC’s announcement Monday. BMC has the right to solicit superior bids from third parties for the next 30 days, though, and the acquisition is subject to shareholder approval.

BMC is one of the so-called “Big Four” vendors in systems management software along with Hewlett-Packard, IBM and CA Technologies. Its product development direction has moved toward the management of cloud computing environments. BMC also recently launched a mobile IT self-service application called MyIT.

First and foremost, the deal “is all about shareholder value,” BMC CEO Bob Beauchamp said in an interview. That said, the group buying BMC has made it “very clear” it wants to invest in the company, he added. “They’re very keen on how we accelerate BMC’s growth.”

After going private, “all indicators are we’ll be a better competitor, a more aggressive competitor,” he added.

Products such as MyIT reflect BMC’s vision for the future of IT systems management, Beauchamp said. Initial demand for MyIT has been strong and the companies that buy it “are going to change how their employees work with IT,” he said.

BMC’s move to go private also makes sense because it will allow it to focus on the long-term picture of its business in a competitive market, said Forrester Research Vice President and principal analyst Jean-Pierre Garbani.

BMC “needs to consider the future of IT management,” he said. “They will need time and not be forced to provide [better] results every quarter.”

The cloud, mobility and other trends have changed the game for IT management, Garbani added. “You’re no longer just managing your network, managing your servers, it’s like managing IT as an enterprise where the infrastructure is essentially abstracted,” he said.

BMC has been preparing for this acquisition for “quite some time,” Garbani said, noting the vendor’s recent announcement that it would reorganize its company structure, forming unified organizations for support, product development, sales and marketing under the slogan “One BMC.”

“They’ve totally rethought the way they’re going to do business,” Garbani said.

BMC customers shouldn’t expect any changes in the short term, but “in the long run it can only be good,” he added. Still, some customers may be affected if BMC decides to streamline its portfolio and sheds underperforming products, Garbani said.

Garbani doesn’t see BMC spinning off entire lines of business, however. “If you do that breakup, it’s going against the grain of integrated IT management,” he said.

Beauchamp declined to say whether any divestitures are in the offing. “There are no plans to do that,” he said. However, BMC’s custom is to review strategic scenarios each year, and that will continue as a private company, he added.

He also wouldn’t speculate on whether BMC could see additional bids emerge, but said the 30-day window at least provides an opportunity “if anyone else does want to raise their hand.”

Updated at 1:45 p.m. PT with more analysis of the deal.

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