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BMC Software Acquiring CA Technologies, Going Private?

BMC Software may acquire CA Technologies and thereby take CA private, but the deal may require bank debt, according to Bloomberg. A potential BMC-CA business combination has major implications across the IT management, monitoring, automation, mobile and security software markets.

Within the IT services industry, midmarket MSPs leverage CA’s Unified Infrastructure Management software for various IT management and monitoring capabilities. The deal would also have some product overlap. Both BMC and CA promote mature application performance monitoring (APM) software, though web-scale upstarts like AppDynamics (acquired by Cisco), Datadog and New Relic have been growing rapidly lately.

CA shares rose roughly 17 percent on Tuesday amid deal speculation. The company is now valued at $13.29 billion.

CA Technologies: Past, Present… Future?

CA gained prominence as a mainframe software provider in the 1980s, attempted to pivot for client-server in the 1990s, but was plagued by an accounting scandal in the 2004 timeframe. The company also has a mixed history in the IT channel, sometimes leaning too heavily on direct sales to win partner loyalty.

CA CEO Michael Gregoire (pictured above) has been striving to modernize the software company since arriving in 2013. The effort has included self-service applications that customers can finally consume by the sip — rather than signing long-term licensing deals. Also, Gregoire’s team has shown channel progress in recent years — particularly with midmarket IT service providers.

BMC’s owners — Bain Capital and Golden Gate Capital — may put in new equity to help finance the potential CA acquisition, Bloomberg reported. However, there’s no guarantee a deal will happen and negotiations are in there early stages, the report said. None of the companies commented for Bloomberg.

Private Equity and IT Management Software

Private equity firms have been particularly activity in the IT management and monitoring software market. Silver Lake and Thoma Bravo acquired SolarWinds and took the company private in 2016. And Thoma Bravo acquired Continuum last week for its MSP-oriented software, automation and IT outsourcing services in the SMB sector.

In the SMB and MSP software sector, Autotask and Kaseya also have private equity ownership.

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10 Comments

Comments

    Joel Mason:

    I have watched CA over the years even before the accounting scandal. the chairman and his partner committed difficult issues for the company and one of them went to camp for taking large sums from the company. In spite of it the company grew and has excellent software for banking industry. at one time computer sciences tried to acquire the company for about $85 a share. this was a long time ago. Today it is a better company and should be worth more than $35.00 it is selling for.

      Exca:

      Right, except it was the other way around; CA attempted to acquire CSC. It was a hostile attempt that failed but would’ve been a company of 23K employees acquiring one of 50K plus.

    Stevie:

    How can the SEC possibly allow such a merger/acquisition. They both sell competitive Mainframe products, and if permitted, would create almost a monopoly of Mainframe software

      phsiii:

      Not disagreeing at all–just pointing out that DOJ examined the CA-Sterling merger in 2000 for antitrust considerations, let it go through. If they let this one go through, then antitrust as a government-regulated concept is clearly dead.

      Ed Gould:

      With Trump and sessions around look for big payment via Russia.

      Thrasher508:

      I think this is the easy part. Mainfame is a declining business and neither company has made any significant inroads in the cloud space. I think this would easily pass regulatory muster.

      Real questions:
      – which management team would survive? Guessing BMC’s or one put forward by the VC’s that fund the merger
      – what would be the strategy? sell off assets to maximize cash flow & margins or focus on long-term growth?

    Joe Panettieri:

    Update: Still no confirmation from BMC or CA that this deal is actually on the negotiating table. But we continue to monitor the situation closely.

    Joe Panettieri
    Content Czar, ChannelE2E
    (a.k.a., editor)

      Thrasher508:

      Unless you believe in “fake news” [Bloomberg is pretty reliable] I would say it’s definitely on the table. And now CA has left the genie out of the bottle. Hard to put back…

      Bclark:

      Any more recent chatter on this? Does it still appear to be under discussion…?

    Joe Panettieri:

    Hi Bclark: There was some unconfirmed chatter on July 19 about continuing talks but we haven’t been able to confirm that report.
    -jp

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