ATM manufacturer NCR saw significant stock price increases on Friday (July 17) as Reuters reported Thoma Bravo was putting together a bid for the company that could potentially value it at around $9 billion, including debt.
According to Reuters, people close to the matter said private equity firm Thoma Bravo is in advance talks with numerous banks to secure debt financing in order to place a bid on NCR, which may happen within the next few days.
Thoma Bravo may seek to borrow as much as 6.5 times NCR’s annual earnings before interest, tax, depreciation and amortization and would still have to raise more than $2 billion in equity to complete its offer, those close to the situation told Reuters.
In recent months NCR has continued to explore new strategic options due to shareholder pressure to go on sale. As of late, the company’s falling stock price and increasingly dissatisfied shareholders have pushed it toward considering alternatives like the spinoff or sale of assets or a return of cash to investors through a dividend or share buyback.
The company has continued to face softening demand from retailers who are leaning increasingly away from traditional PoS systems.
More recently, the company’s stock soared once again as a response to reports that Blackstone and Carlyle, the world’s two largest private equity firms, were joining forces to acquire NCR. Following the outbreak of the news, NCR shares went from $4.15, or 13.2 percent, to $35.52 per share.
In the last year, NCR stock had fallen 11 percent and was trading below where it was 10 years ago. In this year’s first quarter, Reuters reports, NCR’s revenue declined 3 percent to $1.48 billion compared to a year ago. Free cash flow went up from a year ago and was at $24 million in the first quarter.
The Duluth-based ATM maker had a value of around $5 billion as of last month.
If a sale does manage to go through, it might feasibly end up as the largest leveraged buyout of 2015.