Tech Watch | InfoWorld Staff » SunGard goes to private investor group

March 28, 2005 | Comments: (0)

SunGard goes to private investor group

TAGS: None

A group of private investors has purchased SunGard Data Systems, a provider of financial and educational software and disaster recovery services, for a cash-and-debt deal valued at $11.3 billion.

The deal will be the largest private purchase of a technology company and also the largest leveraged buyout since Kohlberg Kravis Roberts & Co. snapped up vanilla wafer and tobacco giant RJR Nabisco in 1989 for $31 billion.

SunGard has made a business of buying companies for almost 20 years, since it was split off from an energy company in the 1980s. In November of last year, the company announced it would split into two parts. One company would provide financial and educational software and the other would focus on disaster recovery services.

A consortium of seven private equity firms, led by Silver Lake Partners, were in on the deal. The other members of consortium include Kohlberg Kravis Roberts, Bain Capital, the Texas Pacific Group, the Blackstone Group, Providence Equity, and the private equity arm of Goldman Sachs. The private equity consortium did not announce if they would stick with the plan to split and sell the company, but SunGard officials said they did not expect the consortium to split the company.

This is not the only recent high-technology bid by the Texas Pacific Group. There were reports a few months back that Texas Pacific was a suitor for IBM's personal computer business that ended up going to Lenovo Group, China's largest computer manufacturer. Lenovo, which is partially owned by the Chinese government, agreed last December to pay $1.25 billion for IBM's PC business, which lost money in the last three-and-a-half years.

But don't count Texas Pacific out on that deal either. No one is commenting publicly, but The Wall Street Journal reported recently that three private-equity firms -- Texas Pacific Group, General Atlantic LLC and the Newbridge Capital LLC affiliate of Texas Pacific and Blum Capital Partners -- are close to taking a stake in Lenovo. If the deal plays out, the end result is that Texas Pacific will likely lend its restructuring expertise to the venture to manage the IBM assets.

It would also give the world's PC business a decidedly Lone Star flavor. Market leader Dell is based in Austin, HP's PC unit is headquartered in Houston and Texas Pacific has offices in Fort Worth.

Posted by Bob Francis on March 28, 2005 04:29 PM

RATE THIS ARTICLE: