DealBook: Buyout Consortium Said Near a Deal for BMC

Business WireRobert Beauchamp, the chief of BMC Software.

8:28 p.m. | Updated

A group of private equity firms led by Bain Capital and Golden Gate Capital is near a deal to buy BMC Software, people briefed on the matter said on Sunday, nearly a year after an activist hedge fund sought to push the technology company onto the auction block.

The group is expected to pay around $46 a share, one of these people said, valuing the company at over $6.5 billion. A deal could be announced as soon as Monday, though these people said that final details were still being negotiated and talks could still fall apart.

Shares in BMC, a maker of corporate back-office software, closed on Friday at $45.42.

Representatives for BMC, Bain and Golden Gate declined to comment or were not immediately available for comment. The price of a potential deal was reported earlier by Reuters.

If completed, a deal would signal the resurgence of the private equity industry. The continued availability of low-cost borrowing and bulging war chests of investor capital has underpinned ever-bigger deals, including Silver Lake and Michael S. Dell‘s $24.4 billion bid to take Dell Inc. private.

A successful transaction would also represent the culmination of a lengthy campaign by the hedge fund Elliott Management to nudge BMC into a sale. Elliott first emerged as a major shareholder last spring, calling for BMC to take drastic action after trailing competitors.

Elliott held a 9.4 percent stake in BMC as of Dec. 31.

In October, BMC hired investment bankers to run a sales process, drawing interest from a number of private equity firms. By late last week, the group led by Bain and Golden Gate emerged as the front-runners to buy the company.

The two firms have substantial experience with technology deals: Bain has invested in the likes of SunGard and DoubleClick through its private equity and venture capital arms, while Golden Gate counts a number of software companies in its portfolio.

The BMC auction was the latest victory by Elliott, which has made a prominent run of agitating for change at technology companies through activist campaigns. It made an unusual bid for Novell over two years ago, culminating in the software company’s $2.2 billion sale to the Attachmate Corporation and Elliott.

Elliott has also taken aim at the likes of Brocade Communications Systems and Compuware.

10 Universities to Form Semester Online Consortium

Starting next fall, 10 prominent universities, including Duke, the University of North Carolina at Chapel Hill and Northwestern, will form a consortium called Semester Online, offering about 30 online courses to both their students — for whom the classes will be covered by their regular tuition — and to students elsewhere who would have to apply and be accepted and pay tuition of more than $4,000 a course.

Semester Online will be operated through the educational platform 2U, formerly known as 2tor, and will simulate many aspects of a classroom: Students will be able to raise their hands virtually, break into smaller discussion groups and arrange and hold online study sessions.

The virtual classroom is a cross between a Google+ hangout and the opening sequence of “The Brady Bunch,” where each student has his or her own square, the equivalent of a classroom chair. However, with Semester Online courses, there is no sneaking in late and unnoticed, and there is no back row.

Unlike the increasingly popular massive open online courses, or MOOCs, free classes offered by universities like Harvard, M.I.T. and Stanford, Semester Online classes will be small — and will offer credit.

“Now we can provide students with a course that mirrors our classroom experience,” says Edward S. Macias, provost and executive vice chancellor for academic affairs at Washington University in St. Louis, one of the participants.

“It’s going to be the most rigorous, live, for-credit online experience ever,” said Chip Paucek, a founder of 2U.

For many of the participating schools, which include Brandeis, Emory, Notre Dame, the University of Rochester, Vanderbilt and Wake Forest, Semester Online offerings will be their first undergraduate for-credit online courses, and the first to offer credit to students from outside the universities.

One draw for the colleges is the expansion in their course catalogs.

“No university can deliver the full range of courses that both might be interesting and useful and enlightening to our students,” said Peter Lange, the provost of Duke. “Imagine if you don’t have a person who works on the Sahel region in Africa, but another school does.”

Consortium of Colleges Takes Online Education to New Level

Even before the expansion, Daphne Koller and Andrew Ng, the founders of Coursera, said it had registered 680,000 students in 43 courses with its original partners, Michigan, Princeton, Stanford and the University of Pennsylvania.

Now, the partners will include the California Institute of Technology; Duke University; the Georgia Institute of Technology; Johns Hopkins University; Rice University; the University of California, San Francisco; the University of Illinois, Urbana-Champaign; the University of Washington; and the University of Virginia, where the debate over online education was cited in last’s month’s ousting — quickly overturned — of its president, Teresa A. Sullivan. Foreign partners include the University of Edinburgh in Scotland, the University of Toronto and EPF Lausanne, a technical university in Switzerland.

And some of them will offer credit.

“This is the tsunami,” said Richard A. DeMillo, the director of the Center for 21st Century Universities at Georgia Tech. “It’s all so new that everyone’s feeling their way around, but the potential upside for this experiment is so big that it’s hard for me to imagine any large research university that wouldn’t want to be involved.”

Because of technological advances — among them, the greatly improved quality of online delivery platforms, the ability to personalize material and the capacity to analyze huge numbers of student experiences to see which approach works best — MOOCs are likely to be a game-changer, opening higher education to hundreds of millions of people.

To date, most MOOCs have covered computer science, math and engineering, but Coursera is expanding into areas like medicine, poetry and history. MOOCs were largely unknown until a wave of publicity last year about Stanford University’s free online artificial intelligence course attracted 160,000 students from 190 countries. Only a small percentage of the students completed the course, but even so, the numbers were staggering.

“The fact that so many people are so curious about these courses shows the yearning for education,” said Molly Corbett Broad, president of the American Council on Education. “There are going to be lots of bumps in the road, but this is a very important experiment at a very substantial scale.”

So far, MOOCs have offered no credit, just a “statement of accomplishment” and a grade. But the University of Washington said it planned to offer credit for its Coursera offerings this fall, and other online ventures are also moving in that direction. David P. Szatmary, the university’s vice provost, said that to earn credit, students would probably have to pay a fee, do extra assignments and work with an instructor.

Experts say it is too soon to predict how MOOCs will play out, or which venture will emerge as the leader. Coursera, with about $22 million in financing, including $3.7 million in equity investment from Caltech and Penn, may currently have the edge. But no one is counting out edX, a joint venture of Harvard and the Massachusetts Institute of Technology, or Udacity, the company founded by Sebastian Thrun of Stanford, who taught the artificial intelligence course last year.

Each company offers online materials broken into manageable chunks, with short video segments, interactive quizzes and other activities — as well as online forums where students answer one another’s questions.

But even Mr. Thrun, a master of MOOCs, cautioned that for all their promise, the courses are still experimental. “I think we are rushing this a little bit,” he said. “I haven’t seen a single study showing that online learning is as good as other learning.”

Worldwide access is Coursera’s goal. “EPF Lausanne, which offers courses in French, opens up access for students in half of Africa,” Ms. Koller said. Each university designs and produces its own courses and decides whether to offer credit.

Coursera does not pay the universities, and the universities do not pay Coursera, but both incur substantial costs. Contracts provide that if a revenue stream emerges, the company and the universities will share it.