We are investigating the fairness of the $87.00 per share in cash pursuant to which New Relic, Inc. (NYSE: NEWR) (“New Relic”) has agreed to be sold to Francisco Partners and TPG Capital.
If you remain a New Relic shareholder and question the fairness of the price, you may contact our firm to discuss your legal rights at no charge by completing and submitting the form below.
Why is there an investigation?
On July 31, 2023, New Relic announced that it had agreed to be sold for $87.00 per share in cash to Francisco Partners and TPG Capital.
“We are investigating whether the New Relic Board of Directors acted in the best interests of New Relic shareholders in approving the sale,” explained Joshua Fruchter, a founding partner of Wohl & Fruchter. “This includes whether the price agreed upon is fair to New Relic shareholders, as well as whether all material information regarding the transaction has been fully disclosed.”
Notably, according to an analysis of Wall Street price targets for NEWR in the last 90 days published on Seeking Alpha, there is a high price target of $113.00 per share, which indicates that at least one Wall Street analyst thinks the deal price is too low.
Additionally, the announcement indicated that New Relic Founder and Executive Chairman of the Board Lew Cirne will be rolling over approximately 40% of his beneficial share ownership, which is not an opportunity being made available to public New Relic shareholders. This is a red flag raising the possibility that the sales price was negotiated down in exchange for granting this unique opportunity to Mr. Cirne. Supporting this thesis is a recent Axios report indicating that, during negotiations, the company “budged more on price” than did the buyers.
Further, after the deal was announced, RBC analyst Rishi Jaluria observed that the $87 price per share, at 6.2x Next Twelve Month (NTM) revenue, is below the 7.0x NTM multiple paid in other recent software deals involving private equity.
Finally, in May 2023, a Truist analyst anticipated that NEWR would be worth $88-$100 a share in a takeover.