Thoughtworks to go private in a $1.75 billion deal with private equity firm Apax Partners

Tech consulting firm Thoughtworks announced on Monday it has agreed to be taken by private equity powerhouse Apax Partners in a deal valued at approximately $1.75 billion. The news comes nearly three years after its stock market debut.

Under the terms of the agreement, Apax Partners will purchase all outstanding shares of Thoughtworks common stock that it does not already own for $4.40 per share. This offer represents a 30% premium over the stock’s last closing price.

The transaction is expected to close in the fourth quarter of this year, with Apax planning to finance the deal through fully committed equity funding. The firm noted that the agreement is not contingent on financing conditions.

Following the announcement, Thoughtworks shares surged 26.8% in premarket trading. The company’s stock has seen a steep decline, losing 87% of its value since the beginning of 2022.

In conjunction with the acquisition news, Thoughtworks reported its second-quarter earnings, revealing a 12.4% year-over-year drop in revenue to $251.7 million. This figure slightly exceeded analysts’ expectations of $251.3 million, as per LSEG data, Reuters reported.

On Friday, Thoughtworks’ board expanded its existing restructuring plans to achieve additional savings between $85 million and $95 million, aiming for total savings of $185 million to $210 million. The restructuring is expected to be completed by the end of October and will affect approximately 6%-7% of the company’s global workforce. Based on Thoughtworks’ 2023 annual report, this reduction equates to around 630 to 735 employees.

Thoughtworks joins a growing list of tech companies opting to go private amid market volatility. This trend includes firms like Squarespace, Model N, Everbridge, and EngageSmart, all of which made similar moves in the first half of this year.

Founded in Chicago in 1993 as a social experiment, Thoughtworks has evolved into a key provider of strategy, design, and engineering services. Its client roster includes major names like Walmart and Canadian telecom giant Telus Corp.