New Relic Shareholders to Receive $87.00 Per
Share in Cash
New Relic (NYSE: NEWR), the all-in-one observability platform
for every engineer, today 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. 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 the
data and efficiency needs of its customers.
Hope Cochran, Lead Independent Director of the New Relic Board,
said, “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.”
Lew Cirne, Founder and Executive Chairman of the New Relic
Board, said, “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.”
Bill Staples, CEO of New Relic, said, “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.”
“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,”
said 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,” said 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,” said Nehal
Raj, Co-Managing Partner of TPG Capital. “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.”
“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,” continued TPG’s Art Heidrich. TPG will invest in New
Relic through TPG Capital, the firm’s U.S. and European late-stage
private equity platform.
“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,” said
directors RK Mahendran, Partner at HMI Capital Management, and
Kevin Galligan, Partner at JANA Partners.
Approvals and Timing
The transaction was approved by the New Relic Board of
Directors. 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 in
support of the transaction. As part of this transaction, Mr. Cirne
will be rolling over approximately 40% of his beneficial
shareholdings.
The transaction 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 and expiration of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The
transaction is not subject to a financing condition. Upon
completion of the transaction, New Relic common stock will no
longer be listed on any public market.
Under the terms of the agreement, New Relic may solicit
alternative acquisition proposals from third parties during a
45-day “go-shop” period following the date of execution of the
merger agreement. The New Relic Board of Directors will have the
right to terminate the merger agreement to enter into a superior
proposal subject to the terms and conditions of the merger
agreement. There can be no assurances that the “go-shop” will
result in a superior proposal. New Relic does not intend to
disclose developments related to the solicitation process unless it
determines such disclosure is appropriate or is otherwise
required.
First Quarter Earnings and Conference Call Update
Separately, New Relic today announced its first quarter fiscal
year 2024 financial results, which can be found on New Relic’s
investor relations website at http://ir.newrelic.com. In light of
the announced transaction with Francisco Partners and TPG, New
Relic has canceled the earnings conference call previously
scheduled for August 8, 2023, at 2:00 p.m. PT / 5:00 p.m. ET.
Advisors
Qatalyst Partners is serving as financial advisor to New Relic,
and Latham & Watkins LLP is acting as legal counsel.
Morgan Stanley & Co. LLC is acting as lead financial advisor
to Francisco Partners and TPG. Goldman Sachs & Co. LLC, J.P.
Morgan Securities LLC, and Moelis & Company are also advising
the firms. Davis Polk & Wardwell LLP, Paul Hastings LLP, and
Kirkland & Ellis LLP are acting as legal counsel to Francisco
Partners and TPG. Freshfields Bruckhaus Deringer US LLP is acting
as legal counsel to Mr. Cirne.
About New Relic
As a leader in observability, New Relic empowers engineers with
a data-driven approach to planning, building, deploying, and
running great software. New Relic delivers the only unified data
platform that empowers engineers to get all telemetry—metrics,
events, logs, and traces—paired with powerful full stack analysis
tools to help engineers do their best work with data, not opinions.
Delivered through the industry’s first usage-based consumption
pricing that’s intuitive and predictable, New Relic gives engineers
more value for the money by helping improve planning cycle times,
change failure rates, release frequency, and mean time to
resolution. This helps the world’s leading brands including adidas
Runtastic, American Red Cross, Australia Post, Banco Inter, Chegg,
GoTo Group, Ryanair, Sainsbury’s, Signify Health, TopGolf, and
World Fuel Services (WFS) improve uptime, reliability, and
operational efficiency to deliver exceptional customer experiences
that fuel innovation and growth. www.newrelic.com.
About Francisco Partners
Francisco Partners is a leading global investment firm that
specializes in partnering with technology and technology-enabled
businesses. Since its launch over 20 years ago, Francisco Partners
has invested in more than 400 technology companies, making it one
of the most active and longstanding investors in the technology
industry. With approximately $45 billion in capital raised to date,
the firm invests in opportunities where its deep sectoral knowledge
and operational expertise can help companies realize their full
potential. For more information on Francisco Partners, please visit
www.franciscopartners.com.
About TPG
TPG (NASDAQ: TPG) is a leading global alternative asset
management firm, founded in San Francisco in 1992, with $137
billion of assets under management and investment and operational
teams around the world. TPG invests across five multi-strategy
platforms: Capital, Growth, Impact, Real Estate, and Market
Solutions and our unique strategy is driven by collaboration,
innovation, and inclusion. Our teams combine deep product and
sector experience with broad capabilities and expertise to develop
differentiated insights and add value for our fund investors,
portfolio companies, management teams, and communities.
Important Information and Where to Find It
This communication is being made in respect of the proposed
transaction involving New Relic, FP and TPG. A special stockholder
meeting will be announced soon to obtain stockholder approval in
connection with the proposed transaction. New Relic expects to file
with the Securities and Exchange Commission (the “SEC”) a proxy
statement and other relevant documents in connection with the
proposed merger. The definitive proxy statement will be sent or
given to the stockholders of New Relic and will contain important
information about the proposed transaction and related matters.
INVESTORS OF NEW RELIC ARE URGED TO READ THE DEFINITIVE PROXY
STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY AND IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors may obtain a free copy of these materials (when
they are available) and other documents filed by the Company with
the SEC at the SEC’s website at www.sec.gov and at New Relic’s
website at ir.newrelic.com/financial-information.
Participants in the Solicitation
New Relic and certain of its directors, executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies from its stockholders
in connection with the proposed merger. Information regarding the
persons who may, under the rules of the SEC, be considered to be
participants in the solicitation of New Relic’s stockholders in
connection with the proposed merger will be set forth in New
Relic’s definitive proxy statement for its special stockholder
meeting. Additional information regarding these individuals and any
direct or indirect interests they may have in the proposed merger
will be set forth in the definitive proxy statement when and if it
is filed with the SEC in connection with the proposed merger.
Forward-Looking Statements
Statements in this communication contain “forward-looking
statements” within the meaning of federal securities laws,
including Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements are based on New Relic’s current
expectations, estimates and projections about the expected date of
closing of the proposed transaction and the potential benefits
thereof, its business and industry, management’s beliefs and
certain assumptions made by New Relic, FP and TPG, all of which are
subject to change. Such statements generally include words such as
“may,” “will,” “should,” “would,” “might,” “expects,” “plans,”
“anticipates,” “could,” “intends,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts,” “potential,”
or “continue” or the negative of these words or other similar terms
or expressions that concern our expectations, estimates and
projections. The forward-looking statements in this communication
include statements regarding the transaction and the ability to
consummate the transaction. Forward-looking statements speak only
as of the date they are made, and New Relic undertakes no
obligation to update any of them publicly in light of new
information or future events. Actual results could differ
materially from those contained in any forward-looking statement as
a result of various factors, including, without limitation: (i) the
completion of the proposed transaction on anticipated terms and
timing, including obtaining stockholder and regulatory approvals,
anticipated tax treatment, unforeseen liabilities, future capital
expenditures, revenues, expenses, earnings, synergies, economic
performance, indebtedness, financial condition, losses, future
prospects, business and management strategies for the management,
expansion and growth of New Relic’s business and other conditions
to the completion of the transaction; (ii) conditions to the
closing of the transaction may not be satisfied; (iii) the
transaction may involve unexpected costs, liabilities or delays;
(iv) the outcome of any legal proceedings related to the
transaction; (v) the failure by FP and TPG to obtain the necessary
debt financing arrangements set forth in the commitment letters
received in connection with the transaction; (vi) New Relic’s
ability to implement its business strategy; (vii) significant
transaction costs associated with the proposed transaction; (viii)
potential litigation relating to the proposed transaction; (ix) the
risk that disruptions from the proposed transaction will harm New
Relic’s business, including current plans and operations; (x) the
ability of New Relic to retain and hire key personnel; (xi)
potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the proposed
transaction; (xii) legislative, regulatory and economic
developments affecting New Relic’s business; (xiii) general
economic and market developments and conditions; (xiv) the evolving
legal, regulatory and tax regimes under which New Relic operates;
(xv) potential business uncertainty, including changes to existing
business relationships, during the pendency of the merger that
could affect New Relic’s financial performance; (xvi) restrictions
during the pendency of the proposed transaction that may impact New
Relic’s ability to pursue certain business opportunities or
strategic transactions; and (xvii) unpredictability and severity of
catastrophic events, including, but not limited to, acts of
terrorism or outbreak of war or hostilities, as well as New Relic’s
response to any of the aforementioned factors. While the list of
factors presented here is considered representative, such list
should not be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present
significant additional obstacles to the realization of
forward-looking statements. Consequences of material differences in
results as compared with those anticipated in the forward-looking
statements could include, among other things, business disruption,
operational problems, financial loss, legal liability to third
parties and similar risks, any of which could have a material
adverse effect on New Relic’s financial condition, results of
operations, or liquidity. New Relic does not assume any obligation
to publicly provide revisions or updates to any forward-looking
statements, whether as a result of new information, future
developments or otherwise, should circumstances change, except as
otherwise required by securities and other applicable laws.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230730918265/en/
Media Contact Elena Keamy New Relic, Inc. PR@newrelic.com
Investor Contact Ingo Friedrichowitz New Relic, Inc.
IR@newrelic.com
Francisco Partners
Whit Clay / Sarah Braunstein wclay@sloanepr.com /
sbraunstein@sloanepr.com
TPG
Courtney Power media@tpg.com
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