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Silver Lake in exclusive talks to divest Serena Software Inc to private equity firm- sources

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February 15
12:42 PM 2014

Sources told Reuters that buyout firm Silver Lake was in advanced discussions to exit Serena Software Inc to private equity firm HGGC LLC. The four people with knowledge of the matter spoke on the condition of anonymity because of the confidentiality of the sale process, the report said.

Silver Lake bought the information technology management company back in 2006 in a $1.2 billion deal. The people said Silver Lake is negotiating a deal with the private equity buyer that could see a price tag of anywhere from $450 million to $500 million for Serena although they said that no final agreement had been arrived at yet. One of the sources added that the two firms inked an exclusivity agreement this week which gives HGGC 30 days to bargain with Silver Lake and finalize a deal, the report said.

Based in San Mateo, California, Serena provides software to firms looking to make their management processes more efficient. Some of its products are competitors of CA Inc, IBM Corp and Compuware Corp. However, its software license revenues have continued to decrease, causing the company to reduce its workforce and lower costs in the past two years, the report said.

Citing the company's most recent financial statement, the report said Serena's total revenue for the nine months that ended October 31 was $135 million. This was a decrease from the $153.6 million it posted in the same period the year before. The statement also revealed that the company had a debt load of $410 million and cash of $94.4 million, the report said.

In order to take Serena private in 2006, Silver Lake committed equity of $335.5 million in the $1.2 billion deal. Regulatory filings showed that it has not obtained cash dividends from the firm since then. Around two-thirds of Serena is owned by Silver Lake with the remaining share mainly held by Serena Founder Douglas Troxel who is now part of the Serena's Board of Directors, the report said.

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