Informatica Corporation (INFA): Will Elliott Management Push for Sale?

It was disclosed in a new filing with the SEC that Paul Singer’s Elliott Management has taken a 5.0% activist position in Informatica Corporation (NASDAQ:INFA), obtaining  5.45 million shares in the Redwood City, California enterprise software company. Elliott also has economic exposure to an additional 3.0% of Informatica’s common stock through derivative agreements in form of cash settled swaps.

The 13D filing represents a new position for Elliott, activist hedge fund founded in 1977, which stands as one of the oldest operating under continuous management to this day. In the filing, the investor expressed the belief that Informatica Corporation (NASDAQ:INFA)’s stock is severely undervalued, and stated that they had already begun discussions with Informatica’s management and board of directors on how best to maximize shareholder value.

Neither of those outcomes would be a surprise, as Elliott has built a reputation over the years for investing in companies (especially those in the technology sector) and seeking their sale or privatization afterwards, all of which raises the spectre of such an event transpiring with Informatica; and unconfirmed rumors suggest Elliott may very well encourage them to pursue one or both of those scenarios.

In one of their most recent deals, Elliott Management spearheaded the eventual sale of Compuware Corporation (NASDAQ:CPWR) to the private equity firm Thoma Bravo LLC for $2.5 billion, after making their own offer for the company at one point, which was rejected. Compuware shareholders ended up receiving $10.92 per share from that sale, a premium of 17% on the company’s August 29 closing price. They similarly built a strong stake in Riverbed Technology, Inc. (NASDAQ:RVBD) and unsuccessfully offered to purchase that company as well, before brokering their buyout for $3.6 billion in October.

A few months before that, Elliott built a 6.7% stake in Interpublic Group of Companies Inc. (NYSE:IPG) and eventually pushed them to sell themselves, though a combination of IGC resistance and few obvious buyers at the time conspired to prevent a sale. Elliott maintains their activist position in IGC, and it’s expected they will nominate their own members for the company’s board over the next few weeks.