(In headline, corrects spelling of company name Serena insteadof Serera, no changes to text)
By Greg Roumeliotis and Nicola Leske
NEW YORK, Nov 25 (Reuters) - Private equity firm Silver Lakeis proceeding with an auction for its information technologymanagement company Serena Software Inc after talks aimed atselling Serena to its technology peer Attachmate Corp ended,according to people familiar with the matter.
Silver Lake is now in talks with a small number ofspecialist buyout firms, including Veritas Capital FundManagement LLC and Platinum Equity LLC, about selling itsmajority stake in Serena, the people said.
A sale could value Serena Software at between $500 millionand $700 million, much less than the $1.2 billion valuationSilver Lake placed on it when it took it over in 2006, thepeople said.
Nevertheless, Silver Lake's latest $10.3 billion privateequity fund was oversubscribed by investors earlier this year,making it more inclined to accept a loss on Serena Software andmove on, the people said.
The people spoke on condition of anonymity because the saleprocess is confidential. Representatives for Serena Software andAttachmate did not respond to requests for comment while SilverLake, Veritas Capital and Platinum equity declined to comment.
San Mateo, California-based Serena provides software tocompanies looking to streamline management processes. Some ofits products compete with CA Inc, IBM Corp andCompuware Corp.
Silver Lake committed $335.5 million in equity in the $1.2billion deal to take Serena private in 2006. It has not takenany cash dividends from the company since, according toregulatory filings.
Attachmate, owned by Francisco Partners LP, Golden GateCapital LLC, Thoma Bravo LLC and Elliott Management Corp, hasbeen considering acquisitions to boost growth since its $2.2billion takeover of Novell Inc in 2011.
But Attachmate's private equity owners could not meet SilverLake's price expectation on Serena Software, the people said.
The highly competitive management software sector has seenmajor private equity dealmaking activity this year, culminatingin the $6.9 billion leveraged buyout of BMC Software Inc earlierthis year by a consortium led by Bain Capital LLC and GoldenGate.
Compuware has also put itself on the block after rejecting a$2.3 billion offer from Elliott, its biggest shareholder. Chiefexecutive Bob Paul told Reuters this month that he had notreceived any takeover offer high enough.
Serena launched two restructuring plans this year to addressfalling profits and boost operating margins. The company reducedits workforce by 8 percent in the first quarter and 24 percentin the second quarter, for a loss of 175 employees in total. Thecompany expects to cut operating expenses for its fiscal year2014 by 17 percent to 19 percent from a year ago.
In the 12 months ending Jan. 31, 2013, Serena reportedadjusted earnings before interest, tax, depreciation andamortization of $74.4 million, down from $85.8 million over thesame period a year ago. The company had total outstanding debtof $410 million as of the end of July.
Silver Lake currently owns about two-thirds of Serena, withthe remainder owned primarily by Douglas Troxel, who foundedSerena in 1980 and who was its chief executive officer until1997. He still sits on Serena's board of directors. (Additional reporting by Soyoung Kim in New York; Editing byDavid Gregorio)
- Investment & Company Information
- Serena Software