Finding debt financing for 18 months was the Achilles heels of the deal. If the deal would have gone through, it would have created history.
According to sources familiar with the matter at hand, BMC Software Inc, a private equity-owned software company has withdrawn from merger talks with enterprise software developer CA Inc following its struggle to secure financing for the deal.
The development underscores the fact that banks are still reluctant to finance leveraged buyouts of large and mature tech companies with big valuations.
Negotiations between the two collapsed following CA’s disclosure to BMC that it expects the deal to take at least 18 months to close after signing because it anticipates a thorough scrutiny by antitrust regulators, especially since both companies have overlapping mainframe businesses, said sources.
Sources went on to add, CA asked BMC to guarantee that it will have requisite finances until the closure of the deal. BMC said, it would be very difficult to get banks to extend debt financing commitments for a period of 18 months.
The sources have preferred the cover of anonymity since the negotiations are confidential.
CA and BMC declined to comment.
Following this development, CA’s shares fell by 10.2% to $31.10 on Thursday.
If the deal would have gone through, it would have made history as the biggest leveraged buyout since Dell Inc’s $24.4 billion take-private transaction in 2013.
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