Microsoft, Salesforce Late Investors in Informatica $5.3 Billion Private Equity Deal

Written by DH Kass 1
August 7, 2015

Microsoft and Salesforce both entered the picture late as strategic investors in Informatica's $5.3 billion private equity buyout.

Enterprise data integration software provider Informatica, which went public some 16 years ago, closed a $5.3 billion deal to go private with European equity firm Permira Advisers and the Canada Pension Plan Investment Board (CPPIB).

The deal’s surprise is that Microsoft (MSFT) and Salesforce (CRM) both entered the picture late as strategic investors. Neither Informatica nor its new investors disclosed the size of their stakes in the newly-private company.

In the private equity deal originally announced in early April, Informatica shareholders received $48.75 in cash for each share of common stock. Informatica’s stock, formerly traded under INFA on the Nasdaq, has been pulled and no longer is trading.

As part of the transaction, Sohaib Abbasi, Informatica chairman and former chief executive officer (CEO), will stay on as chairman and Anil Chakravarthy, chief product officer, takes the reigns as the company’s acting CEO. In addition, Bruce Chizen, former Adobe (ADB) CEO, has joined Informatica’s board and will serve also as a special advisor.

Abbasi said Informatica’s goals remain the same as when it was a public company–focusing on cloud integration, big data integration, master data management tools and data security–but now will be able to chart its growth with the long-term in mind.

“The Informatica goal remains to grow into a multi-billion dollar leader in all things data,” he said. “Now as a private company, with a long view measured in years, not quarters, we will have more flexibility and more time to implement our transformative innovation roadmap and to evolve our business model,” said Abbasi.

The private equity buyout came amid significant pressure on Informatica’s board exerted by activist hedge fund Elliott Management, formerly the software maker’s largest shareholder with an 8 percent stake. Elliott, which disclosed its Informatica stake in an SEC filing in January, at the time describing the software company’s stock as “significantly undervalued” and vowed to “initiated a dialogue” to “maximize shareholder value.”

Chakravarthy said Informatica’s “transformative innovation roadmap includes four distinct billion-dollar opportunities: cloud integration, next generation big data integration, MDM solutions and data security. And living our customer-first culture, we will evolve our business model to match customers’ preferences for pay-for-use subscription offerings.”