Highlights:

  • New Relic develops software that helps businesses track, monitor, debug, and enhance their software development lifecycle by detecting issues with operating applications and websites.

In a transaction valued at approximately USD 6.5 billion, private equity firms Francisco Partners and TPG have agreed to acquire cloud-observability platform New Relic Inc. and take the company private.

The firms have offered shareholders of New Relic USD 87 per share in cash, representing a 26% premium over the company’s 30-day volume-weighted average closing price as of last Friday, according to the company. The company’s shares increased 14% in pre-market trading to over USD 84.

New Relic develops software that helps businesses track, monitor, debug, and enhance their software development lifecycle by detecting issues with operating applications and websites. Utilizing its observability platform, users can increase productivity and prevent problems from becoming significant issues.

Hope Cochran, Lead Independent Director of the New Relic Board, said, “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.”

This information follows a report that the initial deal negotiations had stalled in late May after New Relic had searched for a buyer since the middle of last year. Francisco Partners and TPG could not acquire sufficient debt financing to leverage the funding at the time. Major shareholders, including the founder of New Relic, Lew Cirne, Engaged Capital, and the hedge fund Jana Partners LLC have since approved the transaction.

In 2014, New Relic went public on the New York Stock Exchange, founded in 2008. The transaction is anticipated to close by the beginning of 2024, at which point the company will revert to private ownership.

Nehal Raj, Co-managing Partner at TPG, “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.”

TPG and Francisco Partners have previously collaborated on transactions. In a recent USD 2.25 billion transaction, two private equity firms acquired the government business cybersecurity firm Forcepoint LLC. Additionally, the two companies collaborated in 2021 to acquire integration platform-as-a-service provider Boomi from Dell Technologies Inc. for USD 4 billion.