KKR-owned BMC will separate into two private software companies

(Bloomberg) — BMC Software, a technology provider owned by KKR & Co. for business, it splits into two independent companies.

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One of them will retain the BMC name and house a facility for large mainframe computers used by companies as well as software automation, according to a statement on Wednesday that confirmed an earlier report by Bloomberg News.

The other will be called BMC Helix and will focus on software tools that monitor and manage all the technology in an organization. BMC Helix will compete with companies such as ServiceNow Inc., while BMC’s competitors will include Broadcom Inc.

About two-thirds of the company’s current $2.3 billion in revenue will be taken over by the new BMC business, with the rest going to BMC Helix, Ayman Sayed, chief executive of BMC Software, said in an interview.

Sayed said the split will accelerate growth rates for each of the companies. They are not bringing in a new investor and will continue to be owned by KKR and a minority shareholder, Len Blavatnik’s Access Industries. The companies still need to find their leadership and will start operating as independent entities next year.

BMC is the latest to join a $250 billion wave of corporate breakups that have fueled a broader surge in merger activity around the world. Sayed said the timing of the split was linked to the wider economy emerging from a “slow down period”.

“With interest rates coming down and the market reacting positively and favorably to that, we collectively see 2025 as a year where we’re not only not in a recession, but hopefully we’ll see a wave of growth,” he said. . “We want to make sure we’re positioned to participate and benefit from it.”

Last year, BMC confidentially filed for an initial public offering in which it could have been valued at up to $15 billion, Bloomberg News reported at the time. While the total raised in U.S. IPOs this year is up 61 percent from this point in 2023, listings have slowed as the November election nears, according to data compiled by Bloomberg.

When asked if Houston-based BMC is still an IPO candidate or if either party could attract M&A interest, Sayed said: “Whether it’s an IPO or a private transaction, all options are available.” .

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BMC expanded into new areas but never abandoned mainframe computers, a technology that first entered the market in the 1960s and is still used by banks and other corporations, according to a Forrester Research Inc. report. from March.

“Mainframes are far from dead. Technology continues to power businesses around the world, with some industries relying heavily on it,” Forrester analysts said.

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