Shares in IT group SolarWinds (SWI) flew 23% higher today after it was bought for $4.4billion by private equity group Turn/River Capital.
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According to the terms of the deal, Turn/River Capital will pay SolarWinds shareholders $18.50 per share in cash, representing a premium of about 23.1% from its last closing price. The deal will be debt-funded.
Digital Transformation is Key
SolarWinds President & CEO Sudhakar Ramakrishna said he hoped the deal would help spur its work driving business transformation for corporates looking to invest in hybrid and multi-cloud environments. Dominic Ang, Founder and Managing Partner of Turn/River Capital, described SolarWinds as a “global leader”. He added: “By pairing our team of software operators and investors with their relentless focus on customer success, together we aim to accelerate growth and further innovation.”
The transaction, which was unanimously approved by SolarWinds’ board of directors, is currently expected to close in the second quarter of 2025. In addition to approval by the board, Thoma Bravo, and Silver Lake, SolarWinds’ majority shareholders, who collectively hold approximately 65% of the outstanding voting securities of SolarWinds, have also given the green light. No further shareholder approval is required to complete the transaction. Upon completion SolarWinds will no longer be listed on the New York Stock Exchange, and will instead become a private company.
Debt-Funded Deals Could Be Back
Analysts expect further debt-funded deals in the digital transformation sector in the months ahead as businesses look to keep pace with rivals and as public equity firms gain more confidence given lower interest rates.
Is SWI a Good Stock to Buy?
On TipRanks, SWI has a Moderate Buy consensus. SWI stock’s consensus price target is $17 implying an 7.86% downside.
