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BMC Software Continues Climb on Buyout Rumors

BMC Software Continues Climb on Buyout Rumors

BMC Software (NASDAQ: BMC) is on the rise again Tuesday on word of buyout interest from two separate firms.

On Monday, Bloomberg reported that Kohlberg Kravis Roberts & Co. (NYSE: KKR) and TPG Capital have separately expressed interest in buying the Houston software firm. At this point, BMC hasn't initiated a sale process, as notes Bloomberg.

Another Period of Uncertainty?

Investors may recall the awkward battle between BMC and Elliot Associates in 2012. Elliot acquired over five percent of BMC in May and informed BMC of its intention to nominate five board of directors.

Elliot sought to pursue a sale of the company. BMC's board unanimously rejected the proposal and a bitter back-and-forth ensued.

In connection with Elliot's efforts, BMC adopted a “poison pill” policy. Under the policy, if a person or group acquired at least 10 percent of BMC without approval from the board, shareholders would have one preferred stock purchase right for each share of common stock held.

With that right, each shareholder - other than the one who made the purchase of 10 percent or more of the firm - would have been able to purchase additional shares of common stock at twice the exercise price of the right.

Effectively, BMC dug in its heels and prevented a hostile takeover with the said policy.

After the initial dust settled, BMC reached an agreement with Elliot. BMC agreed to add two of Elliot's nominees to the board in July.

BMC ultimately explored several options including acquisitions, spin-outs, stock splits or a sale, as notes Bloomberg. However, in late 2012, the company decided it would buy back $1 billion worth of stock, according to Bloomberg.

Note that Elliot currently lies close to the 10 percent threshold, owning 9.37 percent of BMC, according to Yahoo Finance. The “poison pill” policy expires in May unless the board decides to renew it.

Sell BMG, Buy BMC?

On March 1, KKR announced the sale of its stake in Berlin-based music company BMG to Bertelsmann. Bertelsmann is an international media company based in Gutersloh, Germany.

KKR Purchases Solar Projects

The BMC purchase would be the second in the last month for New York City-based KKR.

On February 15, the company announced the purchase of three solar photovoltaic projects from an affiliate of Greenwich, Connecticut-based Starwood Energy Group. The projects are located in Ontario, Canada - the largest power market in America's northern neighbor. Terms of the transaction were not disclosed.

Market Reaction

On Monday, KKR rose one percent, likely on word of the buyout rumor.

Meanwhile, BMC rose 1.7 percent on Monday and is up close to 2.5 percent in the pre-market on Tuesday.


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Posted-In: Elliot Associates Starwood Energy Group TPG Capital Yahoo FinanceM&A News Rumors Tech Best of Benzinga

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