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CD&R is in talks to invest $1 billion in software maker Pegasystems

Pegasystems Inc. CEO Alan Trefler on July 1, 2014. Cambridge-based Pegasystems sells software to improve business processes.David L. Ryan

(Bloomberg) – Private equity firm Clayton Dubilier & Rice is in discussions to invest about $1 billion in enterprise software provider Pegasystems, according to people familiar with the matter.

The investment is strategic for CD&R and not a prelude to a takeover of Pegasystems, said one of the people, asking not to be identified because the matter is private. Terms aren’t finalized and the discussions could still fall apart.

Representatives for New York-based CD&R and Cambridge-based Pegasystems declined to comment.

Pegasystems rose 3.95 percent Tuesday to close at $36.56. The stock is down about 70 percent in the past year.

Founded by Chief Executive Officer Alan Trefler in 1983, the company sells software to improve business processes, according to its website. It sells into large organizations such as Toronto-Dominion Bank, Aflac Inc., Cisco Systems Inc. and Banco Santander SA, its website showed.

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Pegasystems has been embroiled in a trade-secrets lawsuit with Appian Corp. A judge in September upheld a jury’s earlier verdict against Pegasystems, which awarded Appian more than $2 billion in damages. Pegasystems is appealing and a decision is possible by the second half of 2023, according to Bloomberg Intelligence.

Even if Pegasystems is able to trim the amount, it would likely still rank among the largest-ever damages awards for trade secrets misappropriation, Bloomberg Intelligence litigation analyst Tamlin Bason wrote in September.

Representatives for New York-based CD&R and Cambridge, Massachusetts-based Pegasystems declined to comment.