Cybersecurity
Thoma Bravo deal sees cybersecurity giant fall back into private hands
October 14, 2019
US private equity giant Thoma Bravo has agreed to buy cybersecurity business Sophos in the latest of a string of take-private deals in Europe. The deal values the British company at more than $3.9 billion, making it the third-largest such transaction to be announced on the continent so far this year. The Chicago-based firm is offering $7.40 per share in cash, or 583 pence per share, representing a premium of 37.1% over the group's 425.5 pence closing price on October 11.
Sophos shareholders intend to unanimously recommend the offer, which, if completed, will put an end to the business' stint as a public company. The business floated on the London Stock Exchange in 2015 at 225 pence per share, hitting a market cap of more than £1 billion (around $1.3 billion). Prior to its IPO, Sophos was owned by British private equity investor Apax Partners, which bought a majority stake in 2010, valuing the company at $830 million.
The Oxfordshire-based business sells anti-virus and encryption software to more than 400,000 customers, including Pixar, Ford and Toshiba. The company has recently returned to profitability, posting a pre-tax profit of $54 million in its annual report for 2019, compared with a loss of $41 million and $49 million for the two preceding years. Revenue has also seen year-on-year growth, increasing around 11% in FY19 to stand at $711 million.
Thoma Bravo has a particular focus on the software sector, having acquired more than 200 businesses representing in excess of $50 billion of value. Within that space, the firm has completed several cybersecurity-related transactions, including the $2.1 billion buyout of Imperva last October and Veracode Software, which the investor purchased for $950 million in January. There are likely to be similar, even larger deals, as Thoma Bravo is contemplating raising a new $15 billion fund next year, according to Bloomberg.
One such deal could be the acquisition of McAfee, in which the firm already has a minority stake, that was rumored last year. The California-based business was last valued at a reported $4.2 billion when TPG entered as a shareholder in 2017. While its majority shareholders are planning an IPO, they are still open to a sale, per reports. Meanwhile, Reuters reported last November that Thoma Bravo was in talks to acquire cybersecurity behemoth—and McAfee competitor—Symantec, which currently has a market cap of around $14.5 billion.
Featured image courtesy of Sophos
Sophos shareholders intend to unanimously recommend the offer, which, if completed, will put an end to the business' stint as a public company. The business floated on the London Stock Exchange in 2015 at 225 pence per share, hitting a market cap of more than £1 billion (around $1.3 billion). Prior to its IPO, Sophos was owned by British private equity investor Apax Partners, which bought a majority stake in 2010, valuing the company at $830 million.
The Oxfordshire-based business sells anti-virus and encryption software to more than 400,000 customers, including Pixar, Ford and Toshiba. The company has recently returned to profitability, posting a pre-tax profit of $54 million in its annual report for 2019, compared with a loss of $41 million and $49 million for the two preceding years. Revenue has also seen year-on-year growth, increasing around 11% in FY19 to stand at $711 million.
Thoma Bravo has a particular focus on the software sector, having acquired more than 200 businesses representing in excess of $50 billion of value. Within that space, the firm has completed several cybersecurity-related transactions, including the $2.1 billion buyout of Imperva last October and Veracode Software, which the investor purchased for $950 million in January. There are likely to be similar, even larger deals, as Thoma Bravo is contemplating raising a new $15 billion fund next year, according to Bloomberg.
One such deal could be the acquisition of McAfee, in which the firm already has a minority stake, that was rumored last year. The California-based business was last valued at a reported $4.2 billion when TPG entered as a shareholder in 2017. While its majority shareholders are planning an IPO, they are still open to a sale, per reports. Meanwhile, Reuters reported last November that Thoma Bravo was in talks to acquire cybersecurity behemoth—and McAfee competitor—Symantec, which currently has a market cap of around $14.5 billion.
Featured image courtesy of Sophos
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