Exclusive: Koch investment arm nears deal for stake in Infor, in tech push - sources

(Reuters) - The private investment arm of Koch Industries, the industrial conglomerate of the billionaire Koch brothers, is nearing a deal to acquire a significant minority stake in Infor Inc that will value the business software company at roughly $10 billion, according to people familiar with the matter.

The deal, if completed, would mark the largest investment for Koch Equity Development LLC, the Koch Industries affiliate that invests excess cash from the parent company. It would also represent Koch’s largest push into the technology sector.

The transaction could be announced as early as next week, the people said on Saturday, asking not to be named because the talks are private. As with any deal negotiation, talks could fall apart at the last minute, the people cautioned.

Koch’s investment will be a mix of preferred and common equity, according to one of the sources.

Infor’s majority owner, Golden Gate Capital, declined to comment. Infor and Koch Industries did not respond to requests for comment.

Koch Industries, which owns brands such as Brawny paper towels, Dixie Cups and Lycra, is controlled by Charles and David Koch, two of the world’s richest men.

Based in New York, Infor helps companies automate business processes. It offers specialized software licenses to specific sectors, as opposed to selling one product to all its customers across industries. It competes with Oracle ORCL.O, SAP SE SAPG.DE and IBM Corp IBM.N.

Koch Equity previously invested preferred and common equity in Solera Holdings Inc, a technology provider to insurance companies, alongside technology-focused private equity firm Vista Equity, which bought the majority of the company last year. It also invested preferred and common equity into home security firm ADT Corp, which was bought by Apollo Global Management earlier this year.

In taking a stake in Infor, Koch Equity prevailed over private equity firms such as Blackstone Group LP BX.N, CVC Capital Partners LTD CVC.UL, Leonard Green & Partners LP and Apax Partners LLP that had been vying to buy either a minority or majority stake in the company, according to people familiar with the matter.

Those firms all declined comment or could not be reached for comment.

The transaction would give Golden Gate Capital a chance to cash in on a portion of its long-held investment in Infor, though it would continue to control the company. Golden Gate has a perpetual buyout fund structure with no finite investment period or fund life.

Summit Partners, a private equity firm that also owns part of Infor, could not be reached for comment.

Reuters first reported in September that Infor had retained Morgan Stanley MS.N to help the company explore options after receiving investment interest.

Golden Gate has owned Infor since 2002, when it acquired one of its predecessor companies, Agilisys. The company changed its name to Infor in 2004, when Agilisys acquired German firm Infor Business Solutions AG.

Under Chief Executive Officer Charles Phillips, a former president of Oracle, Infor has sought to shift its business model to software-as-a-service, or software subscriptions delivered over the cloud to customers, as opposed to software installed on computers.

(This version of the story has been refiled to make clear in headline that private investment arm of Koch Industries and not parent company is taking stake in Infor)

Reporting by Liana B. Baker in San Francisco and Greg Roumeliotis in Orlando; Editing by Leslie Adler