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BMC on the private equity block

$US6.5bn sale expected this week

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“Please don't call us a middleware company” BMC is reportedly close to being acquired in a $US6.5bn deal arranged by Bain Capital and Golden Gate Capital Corp.

Financial press have tracked the deal for almost a month, but things now seem to be getting close to the moment at which prestigious pens reach paper, as Reuters roused itself over the weekend to report “people familiar with the matter” say the company will sell itself for $46 a share.

BMC's product portfolio includes middelware, but the company has of late been more interesting in talking about its BYOD-and-mobility-enabler MyIT or its IT Service Management (ITSM) wares, leaving its help desk and other products in the background.

The company brought $2.2bn through the door during its four most-recently reported quarters and announces its quarterly results on Monday May 6th. Profits are on the agenda: past results showed a net and operating margin of 18 and 25 per cent respectively.

At $46 a share, the private equiteers won't be paying a premium for the company, which trades at $45.42 at the time of writing after recently descending into the high $43 range. The closeness of the reported offer price and current trading price suggests markets have already factored in the purchase.

Private equity companies have been known to break their prey into small pieces and sell them off for an overall profit. Might BMC suffer that fate? Many of its products started life as standalone businesses and the company is not alone in finding it hard to tell a story about how and why they play well as a suite. Acquisitive types like IBM and Oracle already have products to match BMC, or passed on the chance to acquire the bits BMC bought.

Perhaps the equiteers simply feel BMC will do better once freed from the mucky business of being a public company?

We'll know soon enough: if negotiations are going on over the weekend it's usually a sign a deal is close. ®

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