Private equity firm CVC Capital Partners Ltd is in advanced talks to acquire MSC Software Corp, a U.S. company that makes simulation computer programs, for more than $800 million, including debt, according to people familiar with the matter.
A successful deal would vindicate the buyout strategy of activist hedge fund Elliott Management Corp, which pushed MSC to explore a sale in 2008, and then partnered with private equity firm Symphony Technology Group one year later to take it private for $360 million. Elliott had become MSC's largest shareholder, and so it rolled its 13.4 percent stake into that deal.
CVC has so far prevailed over other private equity firms in an auction for MSC, and could finalise an agreement as early as this month, the sources said this week, cautioning that the outcome could still change and negotiations could end without a deal.
The sources asked not to be identified because the sale process is confidential. CVC and Elliott declined to comment, while MSC and Symphony did not respond to requests for comment.
Industrial software companies have been in high demand of late. Siemens AG (SIEGn.DE), for example, agreed to acquire Mentor Graphics Corp MENT.O, a provider of software for designing semiconductors, for $4.5 billion in November.
Based in Newport Beach, California, MSC makes simulation software for manufacturers, including products that help car companies test for crash impact, according to its website.
Although demand for MSC's simulation and analysis software is expected to grow at strong rates, the company has struggled to offset revenue declines from some of its maturing businesses, credit ratings agency Moody's Investors Service Inc said in a research note last year.
Jesse Cohn, the senior portfolio manager who runs Elliott's activism business, sits on MSC Software's board, and has since built out a dedicated private equity arm for the $29 billion hedge fund called Evergreen Coast Capital.
(Reporting by Liana B. Baker and Greg Roumeliotis in San Francisco; Additional reporting by Michael Flaherty in New York; Editing by Gopakumar Warrier)