Francisco Partners & TPG to take New Relic private in $6 billion all-cash deal

A consortium led by Francisco Partners and private equity group TPG will take software provider New Relic private in an all-cash, $87-a-share offer that values the company at nearly $6.5 billion, New Relic announced Monday.

New Relic shares rose 13% in morning trading, to nearly $84. The offer represents a 26% premium to New Relic’s 30-day volume-weighted average closing price, the company said. New Relic builds software to help websites and applications track performance.

The deal is expected to close by early 2024, the company said. It will return New Relic to private ownership nearly nine years after it first debuted on the New York Stock Exchange in 2014.

“We are pleased to partner with Francisco Partners and TPG, who are committed to continuing to build upon New Relic’s strong foundation and achieve its full potential,” New Relic founder and Executive Chairman Lew Cirne said in a release.

Reuters reported in May that Francisco Partners and TPG had ended deal talks after failing to secure enough debt financing to meet New Relic’s desired valuation. The resurrected transaction was announced concurrently with New Relic’s earnings report.

Since that report, the private equity groups were able to obtain financing and meet New Relic’s valuation requirements. Major shareholders, including Cirne and activist hedge fund Jana Partners, have signed off on the deal.

Under the terms of the agreement, New Relic will have a 45-day “go-shop” period, during which it can entertain offers from other qualified bidders.

TPG is an alternative asset manager with investments around the world, including Airbnb, Box and Zscaler.

Francisco Partners is a technology-focused private equity firm with past investments in Barracuda Networks, On Semiconductor and K2. In recent years, the firm has taken other cloud and IT companies private, including in a $1.7 billion deal for Sumo Logic and a 2018 deal for payment technology company Verifone.

Correction: Sumo Logic was taken private in a $1.7 billion deal. A previous version misstated the valuation of the deal.