Actian persuading Pervasive to go private

Contact: Ben Kolada, Thejeswi Venkatesh

After a tough 15 years in the public spotlight, Pervasive Software may have finally found a graceful exit. The data integration vendor, whose revenue has flattened since the turn of the century, today announced that it has received an unsolicited $154m buyout offer from Actian.

Pervasive would be wise to accept the offer, as the Austin, Texas-based company had done little to excite investors during its public lifetime. The company’s annual revenue has been roughly in the $40-50m range ever since 2000, and its shares have appreciated less than the broad, tech-heavy Nasdaq.

The lackluster performance factored into today’s offer. Actian’s bid values Pervasive at 2.3 times trailing sales. The best comparable deal is IBM’s Cast Iron Systems pickup in May 2010, which we estimate was valued at 6.7x revenue. And Boomi took an estimated 20x valuation in its sale to Dell in November 2011, though that target was much smaller. In fact, had it not been for Pervasive’s strong cash balance, the deal value would have been much less palatable. Pervasive held $42m in cash and no debt as of June. That treasury reduces the acquisition’s total cost to Actian by more than one-third.

Pressuring Pervasive’s shareholders to act on the offer, Actian is taking an unusually persuasive tone in its acquisition announcement, blatantly pointing out that its offer is the highest closing price reached by Pervasive’s common shares in the past 10 years. The deal carries a 30% premium to Pervasive’s closing share price on Friday, August 10.

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Tech M&A strikes back

Contact: Jarrett Streebin

As we pointed out in a recent webinar, 2010 is shaping up to be a great year for tech M&A. With year-to-date acquisition activity already surpassing last year’s total value and number of deals, it appears as though most companies were just sitting out the storm until it was time to start buying again.

The same trend in M&A can be seen in our annual AlwaysOn study. Each year before the AlwaysOn Summit at Stanford, we do a breakdown on companies that have been selected to the AO Global 250. This year’s uptick was even more pronounced for firms selected by AlwaysOn. The median revenue multiple for AO companies was 5.2, compared with only 1.5 for tech M&A as a whole. This was based on the incredibly high volume of AO companies bought. From August 2009 to early July, there were 37 exits by AO companies, more than in any other 12-month period before. There was also the second-most total spending, with more than $5.6bn spent.

Some of the more notable exits were AdMob by Google, Greenplum by EMC and Cast Iron Systems by IBM. Google, EMC and IBM were some of the most acquisitive players this year, with each buying three AO companies. They cast their votes in the most meaningful way – by reaching for their wallets.