EQT buys Suse for $2.5bn

The enterprise value represents an effective multiple of 7.9x revenue and 26.7x the company's adjusted operating profit for the twelve months ended 31 October 2017.

The GP drew capital for the carve-out from EQT VIII, a €10.75bn buyout fund that held a final close above its €8bn target in February 2018.  

It is the largest primary buyout of a European enterprise software provider to date, second only to the NOK 45bn acquisition of Visma including secondary buyouts, according to Unquote Data. 

Hedge fund Elliott Management holds a < 5% stake in Micro Focus and had been pushing the business to divest Suse to private equity, according to press reports in April.

CEO Nils Brauckmann and his management team have taken a minority stake in the deal and will remain in their roles. The business has operated semi-autonomously under Micro-Focus's ownership with Brauckmann's team at the helm.

EQT will support Suse with extra capital for add-on acquisitions and organic growth initiatives.

The division generated sales of $320m for the financial year ending October 2017 and employs 1,400 people.

Micro Focus generated revenues of $1.4bn in 2017 and has a market cap of approximately £5.49bn.

Company
Suse is headquartered in Fürth and was founded in 1992. The company develops open-source enterprise software for the Linux operating system. Its product portfolio includes server and cloud storage software, as well as IT infrastructure management software and other corporate software packages. The company generated adjusted EBITDA of $98.9m for the year ended April 2017 and $54.4m for the six months to October 2017.

People
EQT Parnters – Johannes Reichel (partner).
Suse – Nils Brauckmann (CEO).

Advisers
Equity – Jefferies (corporate finance); Arma Partners (corporate finance); Milbank Tweed Hadley & McCloy (legal); Latham & Watkins (legal).

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