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Thoma Bravo deal sees cybersecurity giant fall back into private hands

US-based private equity investor Thoma Bravo has agreed to acquire Sophos in a deal that values the company at more than $3.9 billion.

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

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    Written by Leah Hodgson
    Leah Hodgson is a London-based senior reporter for PitchBook covering venture capital across Europe and the Middle East. Leah graduated from the University of Surrey with a BA in international politics with French. She has previously been a radio reporter in France. She later turned to financial journalism, covering the wealth management industry. She joined PitchBook in 2018.
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