The word is out that CA, Inc. (CA 31.58), which provides enterprise software and solutions, is discussing the possibility of being acquired by BMC Software and going private. This is the news that was reported after Tuesday's close by Bloomberg, which cited people familiar with the process for its reporting.
The stock of CA is up 12.5% in pre-market trading, as investors appear to like the prospect of such a transaction. It wouldn't be a small transaction either. CA, Inc. has a market capitalization of $13.2 billion.
The article from Bloomberg asserts that, if the deal happened, it would be the largest leveraged buyout of a technology company since Dell was taken private in 2013 for close to $25 billion. BMC Software itself went private in 2013 under the hands of private equity firms Bain Capital and Golden Gate Capital.
The people talking to Bloomberg noted the discussions are at an early stage and that a deal might not come to fruition.
The latter disclaimer aside, it is likely an orchestrated leak by these people to Bloomberg in an effort to see how investors would respond to such a proposal. The initial response, as noted above, has been positive, which could spark some more concerted negotiating activity between the companies and with any banks that would be involved with providing the financing for the transaction.
At the moment, it has simply provided a concerted boost for CA's stock price, which was in need of one. Entering today's session, CA was down 0.6% year-to-date, leaving it well behind the S&P 500 (+8.9%) and the S&P 500 Information Technology sector (+18.2%).
According to CA, Inc's latest 10K filing, CyberArk Software (CYBR 48.67), Hewlett-Packard Enterprise (HPE 16.64), IBM (IBM 154.95), Microsoft (MSFT 69.91), Oracle (ORCL 45.84), ServiceNow (NOW 103.01), and VMware (VMW 88.22) are among the companies it counts as its competitors.