BMC Buyout Rumors Resurface, but Options Signal Low-Premium Price

BMC Software Inc. (NASDAQ: BMC) has rallied a bit more on Thursday, due to the existing ongoing takeover rumors that have been present on and off for years in this stock.

The latest is from Reuters calling that two different buyout groups from private equity are readying their bids for April 22 to take the Houston-based software player over. Again, this buyout has been discussed and rumored on and off for years.

We would caution above and beyond any rumors that this actual merger and sale process has been around for some time. Bloomberg covered it in detail in early March and Reuters again reported about it in late March. Activist investors have been after the company to seek a sale back in 2012 and even the CEO commented about customer concern over deals earlier in 2013.

If one software company may be the next to go, this one sounds as though a deal is closer than ever. BMC shares are up 1.7% at $45.54 with a $6.5 billion market cap and the 52-week range is $35.48 to $47.98. The stock trades cheap on an earnings multiple basis for a buyout candidate at less than 13.5-times earnings, although it has debt that some peers have not had.

The options market is not calling for any mega-premium buyout here. If you look at the May-2013 Calls at the $46 strike, these are priced at $1.70 per contract. That only implies a buyout price of $47.70 for the stock.

Stay tuned.