Francisco Partners, TPG to Buy New Relic in $6.5B Take-Private Deal

Private equity giants TPG Capital and Francisco Partners have agreed to acquire San Francisco-based observability software company New Relic in an all-cash take private deal valuing the company at $6.5 billion.

The firms will pay New Relic shareholders $87 per share, representing a 26% premium on the company’s 30-day volume-weighted average closing price through last Friday.

The news follows reports that the original deal broke down in late May. At the time, Francisco Partners and TPG had failed to secure enough debt financing to leverage the funding. Since then, major shareholders, including New Relic founder Lew Cirne, hedge fund Jana Partners LLC and Engaged Capital, have approved the transaction.

New Relic builds software that helps companies track, monitor, debug and improve their software development lifecycle by detecting problems while applications and websites are running. With its observability platform, users can boost efficiency and stay ahead of issues before they become major problems.

Clients include Adidas, American Red Cross, Ryanair, Sainsbury’s, Signify Health and TopGolf, among others.

“As technology continues to become more feature rich and AI-enabled, the need for visibility is only increasing,” says 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.”

This will be the software industry’s second-largest take-private deal of the year, behind the $12.5 billion valuation achieved when Silver Lake and the Canada Pension Plan Investment Board agreed to take Qualtrics private.

The transaction is expected to close in late 2023 or early 2024. New Relic may solicit alternative acquisition proposals during a 45-day “go-shop” period.