New Relic stock catapulted Monday after Francisco Partners and TPG jointly announced plans to buy the company and take it private, valuing the engineering platform at roughly $6.5 billion.
The news sent New Relic shares within striking distance of a buy point at 86 out of a consolidation, according to MarketSmith.com. On today's stock market, New Relic stock surged 13.4% to close at 83.98.
New Relic provides engineers with the tools to plan, build, deploy and run software. Nehal Raj, a co-managing partner at TPG Capital, called New Relic a "pioneer in the observability market." TPG is a global alternative asset management firm, and will invest in New Relic through TPG Capital, the firm's U.S. and European late-stage private equity platform. Francisco Partners is a global investment firm.
New Relic shares have been on a run recently, rising more than 31% this year as of Friday's close.
New Relic Stock: 45 Days To Shop Around
The deal values New Relic stock at a 26% premium to its 30-day volume-weighted average closing price for the period that ended on July 28. Francisco Partners and TPG are also paying about 30% higher than the last 12 months volume-weighted average closing price.
New Relic now has 45 days to shop around for other potential bids. If none arise, the deal is expected to close late this year or early next. TPG and Francisco are paying $87 per share of New Relic stock.
Shares have a strong Composite Rating of 94 out of a best-possible 99, according to IBD Digital. This puts New Relic stock in the leading 6% of all stocks when it comes to fundamental and technical measures.
Follow Allison Gatlin at @IBD_AGatlin.
