Darktrace, the U.K.-based cybersecurity giant, is set to go private in a deal that values the company at around $5 billion. Private equity firm Thoma Bravo has formed a newly-created entity known as Luke Bidco Ltd, which has made an all-cash bid of £6.20 ($7.75) per share for Darktrace. This offer represents a 44% premium compared to Darktrace’s average price for the three-month period ending April 25. However, when compared to Darktrace’s closing price yesterday, which saw a 20% increase to £5.18 in the past month, the premium drops to just 20%.
Darktrace, founded in 2013 in Cambridge, U.K., has gained recognition for its AI-enabled threat detection capabilities, which utilize machine learning to identify abnormal network activity and potential attacks such as ransomware attacks, insider attacks, and data breaches. The company boasts high-profile clients such as Allianz, Airbus, and the City of Las Vegas.
After raising approximately $230 million in venture capital funding and reaching a private valuation of $1.65 billion, Darktrace made its debut on the London Stock Exchange in April 2021 with a valuation of $2.4 billion on its first day. Its share price reached an all-time high of £9.45, but subsequently fell to a record low of £2.29 in February. However, since the beginning of the year, Darktrace’s shares had been steadily rising and had not dropped below £4 since March.
Thoma Bravo’s offer values Darktrace at $5.3 billion (£4.25 billion) on a full-diluted basis, which takes into account all convertible securities and provides a comprehensive view of the company’s valuation. However, the enterprise value, which includes considerations such as debt and cash positions, is approximately $4.9 billion (£4 billion).
The take-private trend has been gaining momentum, with Vista Equity recently announcing its plans to acquire revenue optimization platform Model N in a $1.25 billion deal. This deal marks Vista Equity’s fifth take-private transaction in the past 18 months. Thoma Bravo also revealed its decision to take critical event management software company Everbridge private in a $1.8 billion transaction last month.
Thoma Bravo sees Darktrace as an attractive opportunity to increase its exposure to the rapidly growing cybersecurity market. The firm considers Darktrace to be at the forefront of cybersecurity technology, praising its platform and artificial intelligence capabilities. Andrew Almeida, a partner at Thoma Bravo, acknowledges the accelerating pace of innovation in cybersecurity in response to complex and sophisticated cyber threats.
Darktrace confirmed that it had previously rejected offers from Thoma Bravo, citing them as too low. However, the two companies have now reached an agreement with the amended bid. Darktrace Chair Gordon Hurst expressed his belief that the proposed offer represents an attractive premium and provides shareholders with the opportunity to receive a fair value for their shares in the form of a cash consideration. He also highlighted the benefits of the proposed acquisition, including Darktrace’s access to Thoma Bravo’s deep expertise in the software sector.
The deal is contingent upon shareholder approval, but both Darktrace and Thoma Bravo anticipate completing the transaction by the end of 2024. This development marks a significant milestone for Darktrace as it enters a new phase of growth with the support of Thoma Bravo and its vast experience in the cybersecurity industry.
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