Barclays On Informatica Rumor: Takeout Candidate Investors Have To Decide Between Meaningful Growth And A Sale

In a report rolled out Wednesday, Barclays analysts Raimo Lenschow and Saket Kalia commented on the rumor about Paul Singer’s Elliott Associates pushing for a sale of Informatica Corporation (NASDAQ: INFA).

Analysts at Wedbush already weighed in on the situation, and said that plans to sell the company are “nonexistent.” They added, “management’s plans to invest in growth are counter to the path a company would take to cut costs ahead of a private-equity sale. Further, Informatica's management has a good reputation, allowing them room to make improvements without activist pressure.”

However, Barclays’ view is somewhat different. Lenschow and Kalia said that “takeout candidate investors now face a decision whether to play for meaningful growth while sacrificing profitability in the near term, or to have the company work with Elliott Management to find a buyer.”

With Elliot owning more than 8 percent of Informatica, they “see the case for an LBO above the current stock price and [have] created an interactive LBO model to explore the investment case for a go-private transaction.” According to the report, their work “suggests that a valuation range of $42-$50 per share is plausible, but such a path would forsake the potential growth.”

Barclays maintained an Equal-Weight rating on the stock and $39 price target.

Shares traded recently at $41.66, down about 1 percent.