Intel spins out Wind River unit to TPG?

[Daniel Nenni]

Is Intel getting out of the software business? They bought Wind River for $884M in 2009. Does anyone know what it was valued at? TPG already has part of Mcafee. Anybody else know what is going on here?

TPG | Leading Global Private Investment Firm

“Our technology team is focused on backing strong, market-leading companies in growing industries,” said Nehal Raj, partner and head of technology investing at TPG, in a statement. “We see a tremendous market opportunity in industrial software driven by the convergence of the Internet of Things (IoT), intelligent devices and edge computing. As a market leader with a strong product portfolio, Wind River is well positioned to benefit from these trends. We are excited about the prospects for Wind River as an independent company, and plan to build on its strong foundation with investments in both organic and inorganic growth.”

“This acquisition will establish Wind River as a leading independent software provider uniquely positioned to advance digital transformation within critical infrastructure segments with our comprehensive edge to cloud portfolio,” said Douglas, in a statement. “At the same time, TPG will provide Wind River with the flexibility and financial resources to fuel our many growth opportunities as a standalone software company that enables the deployment of safe, secure, and reliable intelligent systems.”

“This move is designed to sharpen our focus on growth opportunities that align to Intel’s data-centric strategy,” said Tom Lantzsch, senior vice president and general manager of the Internet of Things Group at Intel, in a statement. “Wind River will remain an important ecosystem partner, and we will continue to collaborate on critical software-defined infrastructure opportunities to advance an autonomous future. We expect this transition will be seamless for our mutual customers and partners.”

 

[Daniel Payne]

Intel bought Wind River without ever seeing any synergy or increase in sales, so the deal never delivered on its promises. It makes sense for Wind River to be set free again, however they ended up in TPG which only brings money to the table, not any product ideas or industry vision, so I'm not convinced that Wind River will stay at TPG for the long term.

 

[count]

Wind River's core product, VxWorks, is fairly entrenched in certain niche applications like aerospace and defense and it's not easy for them to switch. And it also happens that customers in those verticals are relatively price insensitive. My guess is that the TPG is going to apply the standard private equity model where they cut R&D and use their pricing power to get maximum value out of VxWorks.

 

[Daniel Nenni]

Wind River's core product, VxWorks, is fairly entrenched in certain niche applications like aerospace and defense and it's not easy for them to switch. And it also happens that customers in those verticals are relatively price insensitive. My guess is that the TPG is going to apply the standard private equity model where they cut R&D and use their pricing power to get maximum value out of VxWorks.

Seems like a better fit for Seimens.... I'm still trying to figure out what TPG is up to. Milk the cash cows until they are dry? Bundle them up and IPO?

 

[count]

Milk the cash cows until they are dry?

This is my bet.

Although bundling it up with a few other software companies and spinning it off as a software rollup similar to Constellation Software might also make sense.