The buyout of Epicor, which provides application software to mid-sized retailers, distributors and manufacturers, is one of the U.S. sector's largest so far this year and is the ninth investment by CD&R since March.
Companies such as Epicor that generate recurring revenue through business software sales have been popular targets for the private equity industry.
CD&R's Operating Partner Jeff Hawn will become chairman of Epicor's board after the deal closes this year, the companies said. Hawn led software firms such as Quest Software and Vertafore before joining the investment firm this year.
CD&R, whose portfolio companies have been Epicor customers, regarded the Austin, Texas-based business as resilient in an economic downturn with a long-term customer base and recurring revenue, a person familiar with the matter said.
CD&R plans to expand Epicor by building cloud-based products with a software-as-a-service model, as well as acquiring other companies in the sector, the source said.
KKR acquired Epicor from Apax Partners in 2016 for $3.3 billion, including debt. The private equity firm had been exploring a sale of Epicor since last year, Reuters reported earlier this month.
UBS Investment Bank is acting as financial adviser and Debevoise & Plimpton LLP as legal adviser to CD&R.
Barclays is the lead financial adviser to KKR and Epicor, while BofA Securities and Jefferies LLC are the financial advisers. Simpson Thacher & Bartlett LLP is the legal adviser to KKR and Epicor.
(This story corrects last paragraph to clarify Barclays is the lead financial adviser for Epicor, not CD&R. The error also occurred in a previous version)
(Reporting by Munsif Vengattil in Bengaluru and Krystal Hu in New York; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Richard Chang)
