Private equity firm Apax buys Thoughtworks in $1.75B takeover deal

Shares of the technology consultancy Thoughtworks Holding Inc. jumped more than 27% during the regular trading session today after it revealed it has agreed to be acquired by the British private equity firm Apax Partners LLP in a deal worth around $1.75 billion.

The transaction will see Thoughtworks exit the stock market and return to being a private company, less than three years after it made its debut via an initial public offering in September 2021.

Apax has agreed to purchase all of the outstanding shares of Thoughtworks that it doesn’t currently own at a price of $4.40 per share. That represents a hefty premium of around 30% on the company’s last closing price.

Chicago-based Thoughtworks helps enterprises modernize their information technology infrastructure. Its consulting professionals can help optimize a company’s database environment, build new applications, revamp their code bases and take on various other software projects. In addition, the company also helps enterprises maintain their existing software, such as by monitoring legacy workloads for potential technical issues and maintaining their code base.

The company operates in a number of adjacent areas as well. According to Thoughtworks, its professionals can help an enterprise modernize its internal software development workflows to make application teams more productive. It says it has helped clients increase the frequency at which they release new code to production and lower downtime. Some of its biggest customers include Walmart Inc. and the Canadian wireless services provider Telus Corp.

Despite offering such a wide range of consulting services, Thoughtworks has struggled to make much of an impact on Wall Street since going public. Prior to today’s announcement, its stock had endured a steady decline, and was down more than 87% since the beginning of 2022.

To try and reverse that decline, Thoughtworks unveiled a restructuring plan earlier this year that will see it attempt to capture savings of between $85 million and $95 million this year. The restructuring involves layoffs, with around 6%-7% of Thoughtworks’ employees expected to lose their jobs. That works out to around 630 to 730 employees, based on the company’s total headcount of just over 10,500 employees at the end of its fiscal 2023 year.

Thoughtworks said its go-private deal is expected to close during the fourth quarter. Apax said it will finance the deal with fully-committed equity financing.

News of the transaction came as Thoughtworks delivered its second-quarter financial results, posting revenue of $251.7 million. That came in just ahead of Wall Street’s consensus estimate of $251.3 million, but down more than 12% from a year earlier.

Photo: Thoughtworks