New Relic – an all-in-one observability platform for every engineer – recently announced that it has entered into a definitive agreement to be acquired by Francisco Partners, a leading global investment firm that specializes in partnering with technology businesses, and TPG, a leading global alternative asset management firm, for $87.00 per share in cash. The all-cash transaction values New Relic at an equity valuation of approximately $6.5 billion.
The purchase price represents a premium of approximately 26% to New Relic’s 30-day volume-weighted average closing price ending on July 28, 2023, and approximately a 30% premium to New Relic’s last-twelve-months volume-weighted average closing price ending on July 28, 2023. And upon completion of the transaction, New Relic will become a private company with enhanced flexibility to continue investing in its leading observability platform and meeting its customers’ data and efficiency needs.
New Relic’s Board of Directors has approved the deal. And New Relic shareholders Lew Cirne, JANA Partners LLC, and HMI Capital Management L.P., representing approximately 20% of New Relic’s outstanding shares, have signed voting agreements supporting the transaction. Cirne will be rolling over approximately 40% of his beneficial shareholdings as part of this deal.
The deal is expected to close in late 2023 or early 2024, subject to the satisfaction of customary closing conditions and certain regulatory items, including the approval of New Relic’s shareholders.
Under the terms of the agreement, New Relic can solicit alternative acquisition proposals from third parties during a 45-day “go-shop” period following the date of execution of the merger agreement.
KEY QUOTES:
“We are pleased to have reached this agreement with Francisco Partners and TPG, which delivers significant, immediate value to shareholders. This transaction is the result of a comprehensive process that included engagement with both financial and strategic parties, led by a transaction committee that included representatives of two of our largest public shareholders. The Board is unanimous in its belief that today’s transaction appropriately reflects the Company’s innovative and strong business while maximizing shareholder value, and I am immensely proud to have worked alongside New Relic’s outstanding management team and my fellow Directors to transform New Relic at this pivotal time.”
— Hope Cochran, Lead Independent Director of the New Relic Board
“Ever since our founding over 15 years ago, New Relic has created and delivered groundbreaking innovations, with a maniacal focus on delivering a leading observability platform to help our customers deliver better software faster. 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.”
— Lew Cirne, Founder and Executive Chairman of the New Relic Board
“New Relic has made significant progress on its consumption business transition and, together with Francisco Partners and TPG, we will have the resources and flexibility to not only complete the final chapter of this transition, but also accelerate our strategy and provide customers with a standardized data-driven practice that any company can benefit from. I am proud of all that the team at New Relic has achieved, and I thank each of our employees for executing in a dynamic market and contributing to our continued success.”
— Bill Staples, CEO of New Relic
“We’ve always admired New Relic’s best-in-class technology platform and New Relic’s continued commitment to provide its customers with a product that continually exceeds expectations.”
— Dipanjan “DJ” Deb, co-founder & CEO of Francisco Partners
“We continue to see tremendous opportunity for New Relic given their unique position in an evolving industry, and as a private company we believe they will achieve their full potential and optimize observability.”
— Brian Decker and Evan Daar, Partners at Francisco Partners
“As technology continues to become more feature rich and AI-enabled, the need for visibility is only increasing. New Relic is a pioneer in the observability market, providing developers and engineers with a unified platform to proactively monitor and manage mission critical applications.”
— Nehal Raj, Co-Managing Partner of TPG Capital
“Digital infrastructure management is a key thematic focus area for TPG, and we’re excited to partner with New Relic to grow the company’s customer relationships and continue enhancing its product capabilities. TPG will invest in New Relic through TPG Capital, the firm’s U.S. and European late-stage private equity platform.
— TPG’s Art Heidrich
“We have appreciated the partnership with New Relic’s directors and management team over the past few years as the company has executed its business model transformation and achieved profitable growth. We enthusiastically support this transaction, which we firmly believe represents the best outcome for shareholders.”
— Directors RK Mahendran, Partner at HMI Capital Management, and Kevin Galligan, Partner at JANA Partners
