The long-running bidding war for Santa Ana’s MSC.Software Corp., a maker of simulation software for aerospace, military and industrial uses, is set to end on Tuesday with a whimper.
The battle wrapped up quietly last week when MSC’s shareholders voted to pick the original buyer, Palo Alto-based private equity firm Symphony Technology Group LLC.
The deal is set to close on Tuesday. Management changes are expected.
Symphony’s $372 million counter offer, which it made on Sept. 29, beat out two private equity firms believed to be San Francisco’s Vector Capital Corp. and Golden Gate Capital.
MSC hasn’t disclosed the names of the counter bidders. New York-based trade publication the Deal.com recently named them as Vector and Golden Gate.
Symphony in July first offered $338 million to take MSC private.
The two counter bidding private equity firms last month made three rival offers for MSC, with Symphony matching or topping each of them.
Golden Gate focuses on investments in technology and retail with some $9 billion under management.
Vector Capital has some $2 billion under management and invests in technology companies that have at least $30 million in revenue. Last year, Vector acquired Irvine-based printer maker Printronix Inc. in a $108 million buyout.
The buyout caps a decade of troubles for the company.
Distractions brought on by several government probes, acquisitions that didn’t pay off and failed turnaround attempts spelled the end for an independent MSC, which once ranked among Orange County’s biggest software makers.
MSC has seen spotty results in recent years and has spent long stretches mired in red ink. Sales have been on a continuous slide.
In 2008, the company posted $247 million in sales, down 12% from a year earlier.
At one point, MSC lost its listing on the New York Stock Exchange, saw executives leave, switched its accounting firm and fended off a takeover attempt by San Francisco hedge fund ValueAct Partners LP.
ValueAct offered $275 million to take the company private after acquiring a 10% stake. The hedge fund later agreed to back off its buyout bid until MSC got its financial statements in order.
After MSC’s filings got up to date it moved from the low-profile Pink Sheets to Nasdaq.
Going private should help shield MSC from a tough public market, the distractions of public reporting and the high costs of regulator compliance, some industry watchers say.
Activist investor Elliott Management Corp., a unit of New York hedge fund Elliott Associates LP, played a role in Symphony’s bids.
Elliott, which is set to provide some debt and private equity financing to help fund the deal, has a roughly 13% stake in MSC and is its biggest shareholder.
MSC is an attractive private equity buyout because of its steady stream of ongoing revenue from licenses and service on its software.
Customers include top tier defense contractors, including Boeing Co. and Northrop Grumman Corp.
