Artificial Intelligence and Machine Learning, Network Detection and Response, Network Firewall, Network Access Control
PE firm tried to take Darktrace private in summer 2022, but could not agree on terms
Michael Novinson (michael novinson) •
April 26, 2024
Private equity giant Thoma Bravo has agreed to buy Darktrace for $5.32 billion, just 19 months after the deal collapsed.
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Chicago-based Thoma Bravo says the proposed acquisition of the Cambridge, UK-based cybersecurity AI vendor will accelerate Darktrace's organic growth, allow it to pursue acquisitions and leverage the private equity firm's operational best practices. Stated. The deal of 620 pence per share ($7.75 per share) represents a 20% premium to Darktrace's Thursday closing price of 517 pence per share ($6.50 per share).
“Darktrace's operating and financial performance has not been commensurately reflected in its valuation and the stock trades at a significant discount relative to its global peer group,” the company said in a regulatory filing on Friday. “It has been done,” he said. “This acquisition provides Darktrace shareholders with the opportunity to receive guaranteed cash consideration at the fair value of their shares.”
In Friday afternoon trading on the London Stock Exchange, Darktrace's share price was up 93 pence ($1.16 per share), or 18%, to 610 pence per share ($7.63 per share). The company's board of directors has pledged to vote its own shares, representing 3.1% of its total outstanding shares, in favor of the Thoma Bravo acquisition, and KKR and Summit Partners have pledged 11.3% of their outstanding shares to vote in favor of the acquisition. agreed to support it.
“The proposed offer represents an attractive premium,” Darktrace chairman Gordon Hurst said in a statement. “The proposed acquisition will give Darktrace access to a strong financial partner in Thoma Bravo with deep software expertise and will strengthen the company's position as a best-in-class cyber AI business headquartered in the UK. You can improve your status.”
What Thoma Bravo is up to with Darktrace
Thoma Bravo said he plans to continue operating Darktrace as an independent business group and has no plans for any major restructuring, significant headcount reductions or changes to the location of Darktrace's headquarters. However, private equity firms will reduce administrative costs which are not significant. On March 27, both parties entered into a non-disclosure agreement regarding the acquisition proposal.
“Darktrace is at the forefront of cybersecurity technology, and we have long admired its platform and artificial intelligence capabilities,” Thoma Bravo partner Andrew Almeida said in a statement. “Thoma Bravo has invested exclusively in software for over 20 years and will take full advantage of our platform, operational expertise and deep cybersecurity expertise.”
The proposed deal comes just 19 months after Thoma Bravo halted initial efforts to acquire Darktrace after the two companies failed to agree on terms. Darktrace said on Friday that it had previously reviewed and rejected an unsolicited offer from Thoma Bravo because Thoma Bravo did not fairly represent the value of the business. Darktrace declined Information Security Media Group's interview request (see below) Thoma Bravo and Darktrace Ax reach agreement over conflicting terms).
Thoma Bravo said it plans to review Darktrace's business and operations within six months of closing to implement operational best practices and build a best-in-class software franchise. The private equity firm wants to expand Darktrace's research and development organization and accelerate the company's sales growth.
“In a world increasingly threatened by AI-powered cyberattacks, our technology is more important than ever,” Darktrace CEO Poppy Gustafsson said in a statement. Ta. “In the face of this situation, we are focused on expanding our product portfolio, entering new markets and offering our customers, partners and colleagues.”
The private equity firm intends to support Darktrace's management team as it continues to grow as an independent business. Thoma Bravo said it has not discussed any form of incentive arrangement with Darktrace employees, but that it intends to put appropriate arrangements in place once the acquisition is complete.
“Darktrace's existing management team and employees will be key to Darktrace's future success and will continue to contribute to Darktrace's long-term success,” Friday's regulatory filing said. It has been stated.
How Darktrace compares to its competitors
Darktrace has only made one acquisition in its 12-year history, acquiring attack surface management company Cybersprint for $53.7 million in February 2022 to eliminate blind spots and detect risks. provided customers with helpful insights. The acquisition was intended to enhance his existing Darktrace product with external vulnerability data and accelerate Darktrace's entry into new areas such as proactive AI cybersecurity.
The go-private deal with Thoma Bravo comes after Darktrace completed an initial public offering on the London Stock Exchange, raising $199.4 million at a valuation of $2.05 billion, according to Crunchbase. It turns out that it was signed almost exactly three years later. Darktrace's valuation has increased nearly 2.5 times since going public in April 2021, despite the economic downturn and internal challenges.
Those challenges included bombshell statements in early 2023 by short seller Quintessential Capital Management that Darktrace had overstated sales, profit margins, and growth rates in its financial statements. The company brought in Ernst & Young in February 2023 to review its financial processes and controls, and while EY found systems that could be improved, Darktrace did not need to make any adjustments to its financials. (reference: Darktrace partners with EY on financial investigation following short seller allegations).
Despite this, Darktrace has experienced significant growth in recent years. Revenue for the quarter ended March 31 was $176.1 million, an increase of 26.5% from the same period last year. Darktrace projects revenue growth of at least 25.5% for the fiscal year ending June 30, 2024, thanks to a high ARR on revenue and a stable exchange rate environment, the company said.
Darktrace had a balanced geographic footprint for the six months ending December 31, 2023. 35% of our business comes from the US, 16% of our business from the UK, 25% from the rest of Europe and 25% from the UK. Rest of the World. The company said it had more than 9,400 customers as of March 31, an increase of 12% year over year, and has 2,300 employees and offices in 24 countries.
Darktrace's net income soared from just $581,000 for the six months ended December 31, 2022 to $52.5 million for the six months ended December 31, 2023. The company's profitability is supported by continued scale efficiencies and continued discretionary cost management. Favorable exchange environment.
The company's technology has received mixed reviews from analysts. Forrester ranks Darktrace 11th out of 13 vendors for its network analysis and visualization capabilities. Forrester praised Darktrace for simplifying the deployment process with its point-and-click capabilities, but the company's users found the value of his interface to be more functional, with confusing visualizations and visibility into network traffic. I mentioned that my sexuality is limited.
Thoma Bravo has taken advantage of market turbulence to buy publicly traded cybersecurity vendors at discount prices, acquiring identity governance company SailPoint for $6.9 billion in August 2022 and acquiring identity and access management company Ping Identity in 2022. It acquired ForgeRock in October 2022 for $2.8 billion for $2.8 billion and in October 2022 for $2.3 billion. August 2023. The private equity firm then merged Ping and ForgeRock under the Ping brand.
