Golden Gate Capital is licking its lips in anticipation of its latest foray into the computer applications space. Earlier this month, the San Francisco-based private equity firm agreed to acquire Blue Martini Software Inc. (NASDAQ: BLUE), a provider of business management and consumer relations software.
Per terms of the transaction, Blue Martini will be acquired in an all-cash transaction valued at $4 per share. The total value of the deal is approximately $54 million, which represents a premium of approximately 63% over the closing price of Blue Martini common stock on Feb. 28, the last day before the proposed transaction was announced. As of press time (March 8), Blue Martini closed at $3.89 per share.
Headquartered in San Mateo, Calif., Blue Martini provides software systems that guide sales people, partners and customers through sales interactions, helping them to sell more. Users of Blue Martini software include department store chain Kohl’s, Saks Fifth Avenue, Mitsubishi, Panasonic, DuPont, motorcycle icon Harley-Davidson, and telecommunications giant Sprint. In all, more than 170 companies worldwide use the company’s products.
Blue Martini’s revenues were $28.3 million for fiscal year 2004, which represented a $4.3 million decrease from the $32.6 million it earned in 2003. The company’s 2004 net loss of $12.1 million, however, was an improvement compared to the $17.6 million it lost in 2003, according to Blue Martini.
Upon completion of the deal, Blue Martini will be merged with retail software provider Ecometry Corp., a subsidiary of Golden Gate’s Multi-Channel Holdings platform that was recapitalized late last year. Nordstrom, Urban Outfitters, Coach, Brookstone and Nine West are counted among Ecometry’s customers.
The transaction has already been okayed by both Blue Martini’s and Multi-Channel’s boards of directors but is still subject to approval by the holders of a majority interest of Blue Martini’s outstanding common stock. Also subject to customary regulatory approvals, the deal is subject to other closing conditions and is expected to close in the second quarter of 2005.
Once it’s tucked into Multi-Channel, Golden Gate hopes to spill Blue Martini’s capabilities across its portfolio to other companies, focusing specifically on manufacturing, warehousing and distribution sectors.
In the last four years, Golden Gate has acquired 25 software companies. Equity for this transaction will come from Golden Gate Capital Fund II, which closed last year with $1.85 billion in limited partner commitments. Golden Gate typically makes equity investments between $20 million and $80 million.