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Antitrust Watchdogs OK $4.5B SolarWinds Take-Private Deal

A $4.5 billion deal for private equity firms Silver Lake Partners and Thoma Bravo to take network management company SolarWinds private has won a green light from antitrust regulators at the U.S. Department of Justice and the Federal Trade Commission, SolarWinds said Monday.

The FTC and the DOJ’s Antitrust Division granted an early end to the buyout’s mandatory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act on Thursday, SolarWinds said. The decision is a major step toward completing the deal, which was unveiled in October and still needs approval from SolarWinds shareholders and regulators outside the U.S.

SolarWinds, a Texas-based information technology management software provider, said on Oct. 21 that Silver Lake Partners and Thoma Bravo LLC would join forces to acquire the company for $60.10 per share in cash. The company, which reported 71,744,028 shares outstanding as of Sept. 30, said the deal’s equity value was $4.5 billion.

The private equity firms’ offer represented a 43.5 percent premium to SolarWinds’ closing price on Oct. 8, a day before SolarWinds disclosed that it was mulling its options, the company said. SolarWinds also said that its board of directors conducted a “comprehensive review” of alternatives before deciding to accept the buyout.

“This transaction recognizes the strength of our unique business model and provides our shareholders with immediate and substantial cash value at a compelling premium,” SolarWinds President and CEO Kevin B. Thompson said in a statement at the time.

Silver Lake managing partners Ken Hao and Mike Bingle said in an Oct. 21 statement that they were impressed by SolarWinds’ “strong track record of growth.”

“We see significant potential to extend and grow the SolarWinds franchise as a private company,” they said.

SolarWinds said the deal was expected to close in the first quarter of 2016, assuming it got the necessary approvals from regulators and shareholders.

In a separate Oct. 21 filing with the U.S. Securities and Exchange Commission, SolarWinds said the private equity firms’ acquisition vehicle would pay a $317.9 million termination fee if it were to break off the deal under certain circumstances. Meanwhile, SolarWinds agreed to pay a $159 million termination fee, and possibly reimburse up to $5 million in expenses, if it backed out for certain reasons.

SolarWinds went public in May 2009, raising about $174 million in an offering that was believed at the time to be the “first venture-backed company IPO since August 2008,” according to a 2009 statement released by Fenwick & West LLP, which represented SolarWinds' underwriters in the initial public offering.

In October of that year, the company said it planned to offer up to 11.5 million shares of common stock worth $227.8 million, according to a filing with the U.S. Securities and Exchange Commission at the time.

A representative of SolarWinds and the DOJ declined to comment Monday. Representatives of Silver Lake, Thoma Bravo and the FTC did not immediately respond to requests for comment.

SolarWinds is being advised by DLA Piper. JP Morgan Securities LLC is serving as its financial adviser.

Thoma Bravo is being advised by a Kirkland & Ellis LLP team including Gerald Nowak, Corey Fox, John Berger, Peter Stach, Dan Hoppe and Joanna Lee and debt partner Francesco Penati, debt associates Katie Taylor and Brian Haroldson, IP partner Seth Traxler and tax partner Kevin Coenen.

Silver Lake is being advised by a Ropes & Gray LLP team including private equity partner Alfred Rose, finance partner Byung Choi and private equity associate Eric Issadore.