Menlo Park private equity firm Silver Lake Partners said it has agreed to acquire San Mateo software company Serena for $1.2 billion, the latest in a string of ambitious software acquisitions by the firm.

The acquisition is the third major software investment in a row for Silver Lake. It purchased Sungard earlier this year for $11.3 billion, the largest ever private buyout of a technology company, and UGS PLM Solutions for $2.05 billion last year.

Serena chief financial officer Robert Pender said the company sold to Silver Lake because it wants to focus on generating profits for the long term. The buyout -- which will award $24 in cash for each share of stock -- will turn Serena into a private company, removing the pressure of having to meet market expectations.

Serena sells products that help large companies manage the development of software applications. For example, large insurance companies have multiple developers that produce their internal software applications, and Serena helps make sure they all work together.

Launched in 1999, it became one of the few local firms that enjoyed solid returns in the immediate years after the Internet bubble burst, a time when most venture capital firms were suffering.

It was one of the first private equity firms to focus on technology, and has made a name for itself with investments such as the $2 billion buyout of Scotts Valley disk-drive maker Seagate in 2000.

While there are similarities in the businesses of Silver Lake's recent acquisitions, each one is considered a separate entity, and there are no plans for merging any of them, said David Roux, a partner at Silver Lake. ``Each of the transactions we've done this year is very much an individual work of art,'' he said.

Silver Like likes to invest in companies that operate in markets that have solid long-term growth potential, but which may be undervalued by the market for the time being, Roux said.

Analyst Kevin O'Marah, vice president of research at AMR Research, said the product management software business -- of which Serena is a part -- enjoys a market of about $10 billion.

AMR Research expects this segment of the business-software market to grow 14 percent a year for the next few years. Corporate clients change product management systems less frequently than they do other business software, O'Marah said. So once a sale is made, it can be lucrative.

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