NEW YORK (TheStreet) -- SolarWinds(SWI) - Get Report stock is soaring 16.12% to $58.29 in mid-morning trading after the company agreed to be acquired by two private equity technology investment firms for $4.5 billion in cash.
Silver Lake Partners and Thoma Bravo agreed to pay $60.10 per share in cash to take the company private.
"Becoming a private company will provide SolarWinds with optimal operating flexibility to execute on its long-term strategy of providing superior products for IT and Dev Ops Pros all over the world," SolarWinds CEO Kevin Thompson said in a statement.
The deal, which has been approved by Solar Winds' board, is subject to stockholder and regulatory approvals, but is expected to close in the first quarter of 2016.
Austin, TX-based SolarWinds is a provider of hybrid IT infrastructure management software.
Separately, TheStreet Ratings team rates SOLARWINDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate SOLARWINDS INC (SWI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.8%. Since the same quarter one year prior, revenues rose by 17.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SWI has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.49, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for SOLARWINDS INC is currently very high, coming in at 97.31%. Regardless of SWI's high profit margin, it has managed to decrease from the same period last year.
- SOLARWINDS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOLARWINDS INC reported lower earnings of $1.03 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($2.05 versus $1.03).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, SOLARWINDS INC's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SWI