Private equity firms Francisco Partners and Evergreen Coast to buy UCC vendor
LogMeIn, which over the past few years has built up its capabilities in the unified communications and collaboration (UCC) space, partly through acquisitions, is going private now that it’s being bought by two private equity firms.
The Lowdown: The deal, which was announced this week, makes real the speculation that had been reported on since at least September, when media accounts of LogMeIn being on the market began to surface.
The Details: Affiliates of Francisco Partners and Evergreen Coast Capital – an affiliate of Elliott Management, a private equity firm that has been growing its presence in the technology space for several years – will spend about $4.3 billion for Boston-based LogMeIn. That comes to $86.05 a share, about a 25% premium on the stock price on Sept. 18, the day before the media reports began circulating.
The deal is expected to close in mid-2020, and LogMeIn has a 45-day “go shop” period during which it can solicit offers from other organizations. The company’s board of directors has approved the deal and is recommending that shareholders accept it.
The firms are getting a company with a broad array of communications products and services. LogMeIn made its bones initially with remote access products but has expanded in the competitive UCC space since. In 2016, it bought the GoToMeeting videoconferencing portfolio from Citrix for $1.8 billion and two years later spent $357 million for unified communications vendor Jive.
The Impact: The crowded UC market has been undergoing some consolidation over the past few years, with such players as ShoreTel (bought by Mitel in 2017) and Polycom (bought by Plantronics in 2018 and renamed Poly) being examples. In addition, Avaya, which had flirted with being acquired, instead partnered with RingCentral in October on Unified Communications-as-a-Service (UCaaS). That said, there are still a lot of players in the space, from the likes of Cisco and Microsoft to smaller vendors like BlueJeans Network and Zoom Communications. Brandessence Market Research is forecasting the global UCC market to grow from $31.8 billion last year to $55.2 billion in 2025.
Background: LogMeIn’s future has been a source of speculation for months. Just a week ago, Bloomberg reported on the possibility of Francisco Partners and Elliott Management buying the company.
The Buzz: “This transaction acknowledges the significant value of LogMeIn and provides our stockholders with a meaningful and certain cash offer at a compelling premium,” LogMeIn President and CEO Bill Wagner said. “Together, Francisco Partners and Evergreen are committed to addressing the unique needs of both our core and growth assets. We believe our partnership with Francisco Partners and Evergreen will help put us in a position to deliver the operational benefits needed to achieve sustained growth over the long term.”
“LogMeIn has a compelling product portfolio and leadership in the Unified Communications and Collaboration, Identity, and Digital Engagement markets,” said Andrew Kowal, senior partner at Francisco Partners. “We look forward to working with Bill and the leadership team at LogMeIn to accelerate growth and product investment organically and inorganically.”
“This investment builds on the strength of our infrastructure and security software franchise, and we’re thrilled to partner with the company to achieve its long-term strategic vision,” said Dipanjan “DJ” Deb, co-founder and CEO of Francisco Partners.
“We have deep appreciation for the LogMeIn franchise and leadership team from our long-term involvement in the business,” said Elliott partner Jesse Cohn and portfolio manager Jason Genrich. “We look forward to partnering with Bill and the entire executive leadership team alongside Francisco Partners on the next phase of growth and value creation for LogMeIn as a private company.”