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New Relic, a San Francisco-based observability software company, has agreed to go private in a $6.5 billion all-cash deal. The deal is led by private equity firms TPG and Francisco Partners. Major shareholders, including founder and executive chairman Lew Cirne and activist hedge fund Jana Partners, have approved the agreement.
Terms of the Agreement and Shareholder Benefits
Under the terms of the agreement, New Relic will have a 45-day “go-shop” period during which it can entertain offers from other qualified bidders. If the deal closes as proposed — likely in late 2023 or early 2024, subject to customary closing conditions — New Relic shareholders will receive $87 per share. This represents a 7.5% premium over the stock’s closing price on the day before the announcement.
New Relic’s Services and Market Position
Founded by Lew Cirne in 2008, New Relic provides software to monitor web and mobile apps in real time. It supports custom-built plugins to collect arbitrary telemetry and performance data. The company partners with companies like IBM, AWS, Azure, and Rackspace, as well as mobile app back-end service providers such as StackMob and Parse, to build connectors and handle observability data flows.
In 2014, after raising nearly $200 million in venture capital, New Relic went public. The company has since made several acquisitions, including Pixie Labs, a service for monitoring cloud-native workloads, and CodeStream, a developer collaboration tool.
The Future of New Relic
New Relic’s decision to go private comes at a time when the observability market is heating up. Enterprises are increasingly investing in data-driven decision-making and looking for ways to manage the complexity of their data infrastructure. Observability companies have raised nearly $2 billion in capital over the past two years.
New Relic CEO Bill Staples stated, “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.”
With the new funding and the move to go private, New Relic is well-positioned to continue its growth and innovation in the observability software market.
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