Darktrace is set to go private in a deal that values the UK-based cyber security giant at around $5 billion.
A newly formed entity called Luke Bidco Ltd, founded by private equity giant Thoma Bravo, has submitted an offer of 6.20 pounds ($7.75) per share, which represents a 44 percent premium to its average price for the quarter. expires April 25. However, this premium falls to just 20 per cent when contrasted with Darktrace’s closing price yesterday, as the company’s shares had risen 20 per cent to £5.18 in the past month.
Founded out of Cambridge, UK in 2013, Darktrace is best known for its smart AI-enabled threat detection features, using machine learning to detect abnormal network activity and attempted ransomware attacks, insider attacks, data breaches and more . The company claims major clients such as Allianz, Airbus and the city of Las Vegas.
After raising about $230 million in VC funding and hitting a private valuation of $1.65 billion;Darktrace went public on the London Stock Exchange in April 2021, with a valuation at the start of the day $2.4 billion. Its shares hit an all-time high later that year at £9.45 and plummeted to an all-time low of £2.29 last February. But they have been steadily rising since the turn of the year and have not fallen below £4 since early March.
Thoma Bravo’s full offering valuation is $5.3bn (£4.25bn) on a full valuation basis, which takes into account all convertibles and is designed to provide a more complete picture of valuation of a company. However, the value of the business in this case is around $4.9bn (£4bn), which includes additional considerations such as debt and cash positions.
Take-private
There have been a number of take-private deals recently, with Vista Equity this month announcing plans to acquire revenue optimization platform Model N in a $1.25 billion deal – its fifth take-private deal in 18 months . And last month, Thoma Bravo revealed it was taking privately held critical incident management software company Everbridge in a $1.8 billion deal.
In one investor relations document published today, Thoma Bravo said iDarktrace represented an “attractive opportunity to increase its exposure” to the fast-growing cybersecurity market.
“Darktrace is on the cutting edge of cybersecurity technology, and we’ve long been fans of its platform and AI capabilities,” said Thoma Bravo partner Andrew Almeida. “The pace of innovation in cyber security is accelerating in response to cyber threats that are both complex, global and complex.”
Separately, Darktrace said it had previously rejected approaches from Thoma Bravo on the grounds that the bids were too low – something the duo have now clearly resolved with the amended bid.
“The proposed offer represents an attractive premium and an opportunity for shareholders to receive the certainty of a fair value cash exchange for their shares,” said Darktrace chairman Gordon Hurst. “The proposed acquisition will provide Darktrace with access to a strong financial partner in Thoma Bravo, with deep software expertise, who can enhance the company’s position as a best-in-class cyber AI business based the UK”.
The deal is still subject to shareholder approval, but the companies said they expect to complete the transaction by the end of 2024.
