Elliott Management plans to push software provider Informatica to sell itself to private equity or another technology company, a person with knowledge of the matter said.
The person asked not to be identified discussing private information. Elliott, the activist hedge fund run by billionaire Paul Singer, has amassed about 8 percent of Informatica and is seeking talks with management and the board of the Redwood City-based company, according to a regulatory filing Monday. Elliott successfully pushed for such transactions at San Francisco-based Riverbed Technology, Houston-based BMC Software and Detroit-based Compuware, among others.
Informatica shares jumped 6.8 percent to $41.04 at the close in Monday’s trading, giving the company a market value of about $4.5 billion. Debbie O’Brien, a spokeswoman for Informatica, declined to comment.
That plan echoes what happened with Informatica rival Tibco Software last year. Palo Alto-based Tibco agreed to be bought by Vista Equity Partners for about $4.3 billion in September. That sale was the product of pressure from another activist investor, Praesidium Investment Management, and came after Tibco’s revenue growth slowed and profit fell short of projections. Praesidium owns 2.3 percent of Informatica’s shares, according to data compiled by Bloomberg.
Private equity and other strategic buyers have embraced enterprise software, attracted by strong recurring revenue once businesses install the technologies that connect new products to existing systems. Other recent deals include Novell and JDA Software Group.
Informatica makes tools to help companies link together and manage large amounts of data. Like other traditional enterprise technology companies it has been forced to change its products to respond to businesses storing more data in computers operated by third-parties, such as Amazon.com, and purchasing software via subscriptions rather than upfront license fees.
To deal with this shift the company started moving toward selling its software as a subscription around eight years ago. About 18 percent of its software sales came from subscriptions in its most recent financial quarter. A recent Barclays survey of resellers said there was “a clear improvement in the interest” among customers for the company’s newer products.
New York-based Elliott’s activist portfolio manager Jesse Cohn has focused most of the hedge fund’s U.S. campaigns on enterprise software and hardware companies. Elliott has also agitated for changes at technology providers including EMC, NetApp, and Juniper Networks after taking stakes in the companies.
Activist investors tend to buy at least 5 percent of a company’s stock and flag their intention to actively engage corporate executives and directors by disclosing their holding in a 13D filing with the SEC.
