KKR & Co. (NYSE:KKR) announced this morning that it agreed to acquire BMC Software, officially acknowledging a transaction that had been speculated about and discussed over the last week.
This transaction, reported by Bloomberg to be valued at approximately $8.3 billion including debt, is below the $10 billion figure that had been rumored but represents the firm’s biggest acquisition since the 2008 financial crisis.
The transaction is expected to close in the third quarter of 2018.
Closing The Deal
Big Deal: Though this deal itself is no record, it illustrates a swing back to bigger leveraged buyouts across the board–fueled by a record $1 trillion in dry powder. KKR is expected to be both more aggressive and more willing to skew bigger in a larger strategic shift.
Spooling Up: This is the fourth $1 billion-plus technology acquisition by a buyout firm this year (following acquisitions of Mitel, VeriFone, and CommerceHub). This ties the number of such deals in all of the previous two years.
Seeing Runway: KKR is said to be looking to capitalize on potential go-to-market, as Bain and GGC were seen to be focused primarily on product and invested hundreds of millions of dollars in R&D and other improvement initiatives. This opens the company to organic growth–a healthy complement to the standard PE playbook of bolt-on acquisition.