New Relic (NYSE: NEWR), a leader in observability platforms for engineers, has announced a definitive agreement to be acquired by Francisco Partners and TPG in a significant $6.5 billion all-cash transaction. This acquisition, spearheaded by Francisco Partners Management LLC, a firm known for its strategic investments and revenue-focused management, signals a pivotal moment for New Relic and the observability market.
The deal, priced at $87.00 per share, represents a substantial premium for New Relic shareholders, approximately 26% over the 30-day volume-weighted average closing price and 30% over the last-twelve-months average. Becoming a private entity under the ownership of Francisco Partners and TPG, New Relic aims to leverage enhanced flexibility to accelerate innovation and better serve its expanding customer base with cutting-edge data and efficiency solutions.
Hope Cochran, Lead Independent Director of the New Relic Board, emphasized the shareholder value delivered by this agreement, stating, “This transaction is the result of a comprehensive process… The Board is unanimous in its belief that today’s transaction appropriately reflects the Company’s innovative and strong business while maximizing shareholder value.”
Lew Cirne, Founder and Executive Chairman of New Relic, echoed this sentiment, expressing enthusiasm about the partnership with Francisco Partners and TPG. “We are pleased to partner with Francisco Partners and TPG, who are committed to continuing to build upon New Relic’s strong foundation and achieve its full potential.” This partnership underlines the confidence in New Relic’s future growth and the strategic vision of Francisco Partners management llc revenue enhancement through operational expertise.
Bill Staples, CEO of New Relic, highlighted the strategic alignment, “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.”
Francisco Partners: A Deep Dive into Technology Investment and Revenue Growth
Francisco Partners stands out as a global investment powerhouse, specializing in technology and technology-enabled businesses. With a portfolio spanning over 400 companies and approximately $45 billion in capital raised, Francisco Partners brings a wealth of experience in nurturing and scaling technology firms. Their investment philosophy centers around leveraging deep sector knowledge and operational expertise to unlock the full potential of their portfolio companies, often with a strong focus on driving revenue and improving management efficiency. The acquisition of New Relic fits squarely within Francisco Partners’ strategy of investing in market-leading technology platforms with significant growth potential. Their approach often involves working closely with management teams to optimize operations, enhance product development, and accelerate market penetration, all contributing to robust revenue streams.
Dipanjan “DJ” Deb, co-founder & CEO of Francisco Partners, articulated their admiration for New Relic: “We’ve always admired New Relic’s best-in-class technology platform and New Relic’s continued commitment to provide its customers with a product that continually exceeds expectations.” This highlights Francisco Partners’ belief in New Relic’s inherent value and potential for further expansion under their guidance.
Partners at Francisco Partners, Brian Decker and Evan Daar, further elaborated on the strategic rationale: “We continue to see tremendous opportunity for New Relic given their unique position in an evolving industry, and as a private company we believe they will achieve their full potential and optimize observability.” This vision aligns with Francisco Partners management llc revenue growth objectives, suggesting a focused approach to capitalize on the expanding observability market.
TPG Capital: Strengthening the Investment in Digital Infrastructure
Joining Francisco Partners in this acquisition is TPG, another global alternative asset management firm with substantial assets under management, totaling $137 billion. TPG’s investment through its TPG Capital platform underscores the increasing importance of digital infrastructure management in today’s technology landscape. TPG’s diverse investment strategies and deep sector expertise complement Francisco Partners’ technology focus, creating a powerful partnership to propel New Relic forward.
Nehal Raj, Co-Managing Partner of TPG Capital, pointed out the growing demand for observability: “As technology continues to become more feature rich and AI-enabled, the need for visibility is only increasing. 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.”
Art Heidrich of TPG further emphasized their strategic interest: “Digital infrastructure management is a key thematic focus area for TPG, and we’re excited to partner with New Relic to grow the company’s customer relationships and continue enhancing its product capabilities.”
Transaction Details and Future Outlook
The acquisition has received unanimous approval from the New Relic Board of Directors, with key shareholders, including Lew Cirne, JANA Partners LLC, and HMI Capital Management L.P., representing approximately 20% of outstanding shares, already expressing their support through voting agreements. Lew Cirne’s rollover of approximately 40% of his shareholdings further demonstrates confidence in the future trajectory of New Relic under private ownership.
The transaction is anticipated to close in late 2023 or early 2024, pending customary closing conditions, regulatory approvals, and shareholder approval. Post-acquisition, New Relic will transition to a private company, delisting from the public market, which is expected to provide operational agility and allow for long-term strategic investments without the quarterly pressures of public reporting. This privatization, combined with the strategic management and financial backing of Francisco Partners management llc revenue focused strategies and TPG’s investment, positions New Relic for accelerated growth and innovation in the observability space.
RK Mahendran, Partner at HMI Capital Management, and Kevin Galligan, Partner at JANA Partners, jointly stated their support: “We enthusiastically support this transaction, which we firmly believe represents the best outcome for shareholders.”
Advisors
The deal involves prominent advisors, with Qatalyst Partners serving as financial advisor to New Relic, and Latham & Watkins LLP as legal counsel. Francisco Partners and TPG are advised by Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Moelis & Company as financial advisors, and Davis Polk & Wardwell LLP, Paul Hastings LLP, and Kirkland & Ellis LLP as legal counsel.
Conclusion: A New Chapter for Observability and Revenue Growth
The acquisition of New Relic by Francisco Partners and TPG marks a significant development in the observability market. The partnership promises to bring together New Relic’s leading technology platform with the strategic and operational expertise of Francisco Partners and TPG. With a clear focus on enhancing Francisco Partners management llc revenue generation and optimizing business operations, this acquisition is poised to propel New Relic into a new phase of growth and solidify its position as a leader in providing comprehensive observability solutions for the digital age. The transition to private ownership is expected to provide New Relic with the necessary resources and flexibility to innovate, expand its market reach, and ultimately deliver even greater value to its customers and stakeholders.
