Informatica Corp

Informatica (INFA) has generated returns of 49.16% in the TTM (trailing twelve months) for investors and 1.52% in the trailing one-month period.

Earlier this month, it was announced that Microsoft (MSFT) and Salesforce (CRM) have joined in the $5.3 billion leveraged buyout deal of Informatica.

In April 2015, it was announced that Informatica agreed to be bought by Canada Pension Plan Investment Board and Permira Advisors for $5.3 billion.

The MAC (material adverse change) clause lays out the circumstances under which the private equity consortium can back out of the deal with Informatica (INFA).

As a general rule, MAC clauses follow a similar format. Nearly anything that has a material adverse effect on the company will be considered a MAC.

Let’s take a look at the specific conditions that could stop the Informatica deal. In private equity transactions, arbitrageurs take a very close look at the MAC.

For merger arbitrage professionals, competitive deals can make your quarter. Could the Informatica merger get broken up by an interloper?

The Informatica merger is a cash deal with a shareholder vote. It will have a longer timeline. Mergers generally take longer.

A merger agreement is a contract. If the consortium tries to walk away without a MAC occurring, the buyer could sue and demand specific performance.

The typical strategy for an activist investor is to identify an undervalued company, take a 5% position, file a 13D, and push the company to sell itself.

Informatica has a non-solicitation agreement with a fiduciary out. Prior to shareholder approval, it could discuss another merger if approached by another suitor.

Based in Redwood City, California, Informatica provides data integration software and services. Software and services revenues were each up in 4Q14.

Elliott Management, a New York–based hedge fund, disclosed new positions in a 13F filed last month. Elliott Management has over 83 stocks in its portfolio.

Informatica Data Exchange products offer technology infrastructure for multi-enterprise data integration, partner management, and business-event monitoring.

Informatica’s master data management products deliver consolidated and reliable business-critical data—or master data—to improve business operations.

Informatica is looking to big data and Internet of Things (IoT) trends to drive future growth, disclosing its vision for an intelligent data platform.

Informatica’s target opportunities include cloud integration, master data management, data integration for next-generation analytics, and data security.

Informatica forecasts a weak 2015 non-GAAP operating margin guidance of between 21% and 22%. But it believes the subscription business will improve by 2016.

Informatica stock surged 6.8% to $41.04 on news of Elliott’s activist stake, bringing its market capitalization to around $4.5 billion.