September 18, 2006
Intergraph Acquired: will Become a Private Company
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Welcome to AECWeekly! On August 31, Intergraph announced the signing of a definitive agreement to be acquired by an investor group led by Hellman & Friedman LLC and Texas Pacific Group, in a leveraged buyout transaction worth approximately $1.3 billion. Read what the experts have to say about this announcement and other trends in this week's Industry News.
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Intergraph Acquired: will Become a Private Company
by Susan Smith
In years past, Intergraph has been known as a hardware company (producer of the Clipper workstation), the former half-owner of Bentley's MicroStation, and most recently, has rearchitected itself as a "global provider of spatial information management (SIM) software, fusing spatial capabilities to security." Intergraph is out there in 60 countries, operating in many different industries – from government to military to industrial, primarily in the areas of geospatial and process, power and marine.
On August 31, Intergraph announced the signing of a definitive agreement to be acquired by an investor group led by Hellman & Friedman LLC and Texas Pacific Group, in a leveraged buyout transaction worth approximately $1.3 billion. Intergraph investors will receive $44.00 in cash per share of Intergraph common stock, which is a 22% premium over Intergraph's closing share price for the previous 20 trading day period. . Intergraph's board of directors recommends that Intergraph's stockholders adopt the agreement, and the voting process to approve the transaction will take place at a later, undisclosed date.
Hellman & Friedman and Texas Pacific Group are leading global private equity firms with great capital resources and expertise in software technology, according to Halsey Wise, Intergraph president and CEO. A press release issued by Daratech, Inc. stated that "Texas Pacific Group is based in Fort Worth, Texas and has more than $20 billion in assets under management, while Hellman & Friedman, based in San Francisco has raised more than $8 billion in buyout funds." JMI Equity, a private equity firm based in San Diego and Baltimore that focuses exclusively on investments in the software and business services industries, was also involved in the transaction.
Bryan Taylor, partner at Texas Pacific Group commented on the statement announcing the deal, "Intergraph is well-positioned to continue to provide its market-leading software and services solutions to the energy, chemical, and shipbuilding infrastructure design markets, as well as to the increasingly relevant areas of critical infrastructure protection and homeland security."
Freescale, is going to be taken private as well. This is very much within the sweet spot for Hellman & Friedman and Texas Pacific Group."
"There is a perception that as a private company, their [Intergraph's] opportunities to pursue additional growth stand to be enhanced. They will able to plan for the long term. Hellman & Friedman and Texas Pacific Group have an investment horizon that's far longer than most shareholders. Shareholders are thinking about the next quarterly earnings report or the next big move. These guys are in it for the long haul which will ultimately benefit the company."
Monica Schnitger of Daratech confirms this view. "There are a lot of compelling arguments for companies to be private: the ability to run the company on a long-term plan without public scrutiny every quarter; no overhead for public regulatory compliance; in Intergraph's case, focusing on the operating units and not on the intellectual property (IP) litigation ... A lot of publicly-traded software companies are pondering the benefits and drawbacks of taking their organizations private. We hear most about publicly-traded software companies, but there are very large, successful, privately-held firms all over the world and in all areas of the software universe."
entities or more -- it will depend on the business climate at that time, how the end-markets perceive a combined software and services offering, how Intergraph's products evolve over the period, etc."
No layoffs or management changes are planned, it's business as usual, and the company will for the foreseeable future, remain in Huntsville, said Morgan. The only difference will be the company will be operating as a private entity.
The transaction is to be financed through a combination of debt and equity financing.
Intergraph's Revenue Growth
company sells, including its traditional big sellers, such as PDS and ISOGEN, as well as its new generation products. Although the company did not break out Q2 sales by product, Daratech believes that PP&M's new-generation products are growing nicely even while PDS sales continue to be strong. PP&M's annual revenue growth has been about 13% over the last two years as it rolls out its new product offerings and reinvigorates its installed base.
general, SG&I's revenue has trended upwards at about 2% per year as the company closes increasing numbers of public safety contracts, grows sales of digital mapping cameras and geospatial imaging solutions, and performs contract work under long-term US Federal government contracts."
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-- Susan Smith, AECCafe.com Managing Editor.
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