KKR & Co., a private equity group, on Monday said it has agreed to dispose of its business operating systems unit Epicor Software to Clayton Dubilier & Rice in a contract worth around $4.7 billion.
The deal is expected to be finalized before the year ends, at which point Clayton operating partner Jeff Hawn will be picked as chairman of the Epicor Board, the companies disclosed.
The acquisition of Epicor is the ninth investment by Clayton since March. Epicor, which was acquired by KKR from Apax Partners in 2016 for around $3.3 billion, provides application software to mid-size companies and is among the biggest firms in the U.S.
Epicor was established in 1972 and transferred its main operations to Austin, Texas in 2014. The group currently has 20,000 customers globally, with around 240 employees in Austin. Amber Gunst, chief executive of the Austin Technology Council, said the buyout is a welcome development for the state's technology market.
Shares of KKR were up almost 2 percent to $35.59 during pre-market sessions and closed at 35.82 on Monday. The private equity company disclosed that new product releases at Epicor enabled it to earn 73 percent recurring sales under its four-year control. Companies like Epicor that can produce a consistent flow of revenue have been at the crosshairs of private equity firms.
CD&R is looking at growing Epicor's portfolio by creating Cloud-based products with a software-as-service infrastructure, including the procurement of other business entities in the market, executives said.
KKR shares have rallied more than 20 percent year-to-date and the group has been given a bullish Strong Buy by analysts, in addition to an average price target of $39.96, suggesting a 12 percent extra upside is attainable.
CD&R and KKR have Barclays as their main financial adviser while Jefferies LLC and Bank of America Securities are the financial advisers. Bartlett LLP and Simpson Thacher will act as legal advisers to Epicor and KKR.
