KKR Sells Epicor Software To CD&R In $4.7 Billion Deal


Private equity company KKR & Co. announced on Monday that it has entered into a definite agreement to sell business software company Epicor Software to Clayton Dubilier & Rice in a deal valued at $4.7 billion.

KKR (KKR) shares rose 1.9% to $35.59 in morning market trading. The private equity firm said that under its four-year ownership, a series of new product releases at Epicor has led to a revenue mix comprising 73% recurring revenue, which includes an industry-leading SaaS business growth rate of 60% year-to-date. 

“Four years ago, we embarked on an ambitious product modernization journey together with Epicor and are incredibly proud of the successes that the company has achieved to date, particularly with its recent cloud releases,” said John Park, Head of Americas Technology Private Equity at KKR. “We are confident that CD&R will provide valuable support as the company continues these product- and customer- centric investments to accelerate growth in the cloud.”

Epicor is a business software vendor providing cloud-enabled services to more than 20,000 customers globally. The company’s flagship products are tailored to support complex, vertical-specific workflows and provide mission-critical support to customers seeking to drive growth and profitability in their own businesses. 

Shares in KKR have jumped 22% year-to-date and the global investment company scores a bullish Strong Buy Street consensus. That’s alongside an average analyst price target of $39.96, indicating 12% additional upside potential lies ahead.

Oppenheimer’s Chris Kotowski recently published a Buy rating on the stock while marginally reducing his price target from $40 to $39. He made the call after KKR’s earnings revealed a ‘steady performance in choppy markets.’

“As always, the earnings reports of the private equity (PE)-based alternative asset managers aren’t just about earnings but also about fund performance and fundraising, and KKR had an excellent quarter on all fronts” cheered the analyst.

He continues to see KKR as the group’s most underappreciated growth story, noting that fund performance was strong, with the flagship PE funds up 11%, real estate 2% and Infrastructure 7% linked quarter, and the three are up 14%, 13% and 30% Y/Y, respectively.

“We continue to think KKR is a very compelling investment at 14.1x enterprise value (ex net cash & investments) to our 2021E fund management DE including EBC of $1.71/share” Kotowski concluded. (See KKR stock analysis on TipRanks).

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