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SolarWinds Gets Bought Out In A Perfect 'Home Run' Scenario

SolarWinds Gets Bought Out In A Perfect 'Home Run' Scenario
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  • Shares of SolarWinds Inc (NYSE: SWI) surged higher by more than 15 percent on Wednesday.
  • SolarWinds announced it has been acquired by Silver Lake Partners and Thoma Bravo for $60.10 per share.
  • Daniel Ives of FBR commented in a note that the transaction is a "Murphy-like home run scenario" for investors.

SolarWinds announced on October 9 that it has started to review strategic alternatives following an unsolicited expression of interest from a third party. Following the announcement, the stock surged higher by more than 12 percent.

At that time, Daniel Ives of FBR & Co. commented that a hypothetical transaction to a third party would represent a "potentially rosy scenario." The analyst estimated that the company could be acquired for $55 to $60 per share.

SolarWinds Announces Sell Of Itself

SolarWinds announced on Wednesday that has been acquired by two private equity firms (Silver Lake Partners and Thoma Bravo) for $60.10 per share, valuing the transaction at $4.5 billion.

In a new report published after the company's announcement on Wednesday, Ives commented that the deal is a "Murphy-like home run scenario" for investors who have stuck with the company through its "rollercoaster ride" which included "execution speed bumps."

Ives added that the take out price of $60.10 is on the high end of his initial expectation and represents a roughly 26x multiple on the consensus estimate for fiscal 2016 earnings per share.

"Given the company's unique tool based, low touch model we see no other strategic buyers for SolarWinds as a financial buyer clearly represented the most logical path given its free cash flow generation and stickiness," Ives concluded.

Image credit: Public Domain

Latest Ratings for SWI

Nov 2015FBR CapitalDowngradesOutperformMarket Perform
Nov 2015Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2015Cowen & Co.DowngradesOutperformMarket Perform

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