Darktrace is being taken private in a deal that values the British cybersecurity giant at around $5 billion.
A newly formed company called Luke Bidco Ltd, founded by private equity giant Thoma Bravo, has made a cash offer of $7.75 (£6.20) per share, a 44% premium to the average price for the Three-month period equals Ends April 25th. However, this premium drops to just 20 per cent when compared to Darktrace’s closing price yesterday, as the company’s shares had risen 20 per cent to £5.18 in the past month.
Founded in 2013 in Cambridge, UK, Darktrace is best known for its AI-powered intelligent threat detection, which uses machine learning to detect abnormal network activity and therefore attempts at ransomware attacks, insider attacks, data breaches and more. The company has well-known customers such as Allianz, Airbus and the city of Las Vegas.
After raising around $230 million in VC funding and reaching a private valuation of $1.65 billion, Darktrace went public on the London Stock Exchange in April 2021 with an opening valuation of $2.4 billion. Its shares reached an all-time high of £9.45 later that year and plunged to an all-time low of £2.29 last February. However, they had been rising steadily since the turn of the year and had not fallen below £4 since the start of March.
The full valuation based on Thoma Bravo’s offering is $5.3 billion on a so-called fully diluted basis, which takes into account all convertible securities and is intended to provide a more comprehensive view of a company’s valuation. However, the enterprise value in this case is approximately $4.9 billion, including additional considerations such as debt and cash balances.
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 announced that it was taking Everbridge, a critical event management software company, private in a $1.8 billion transaction.
In an investor relations document released today, Thoma Bravo said Darktrace represents an “attractive opportunity to increase its exposure” to the fast-growing cybersecurity market.
“Darktrace is at the cutting edge of cybersecurity technology and we have long been admirers of its platform and artificial intelligence capabilities,” said Andrew Almeida, Partner at Thoma Bravo. “The pace of innovation in cybersecurity is accelerating in response to cyber threats that are simultaneously complex, global and sophisticated.”
Separately, Darktrace said it had previously rejected offers from Thoma Bravo on the grounds that the offers were too low – something the duo has now clearly resolved with the amended offer.
“The proposed offer represents an attractive premium and an opportunity for shareholders to receive the security of a cash consideration at a fair value for their shares,” said Gordon Hurst, Chairman of Darktrace. “The proposed acquisition will give Darktrace access to a strong financial partner in Thoma Bravo with extensive experience in the software sector, which can strengthen the company’s position as a world-class cyber AI company headquartered in the UK.”
The deal is of course still subject to shareholder approval, but the companies said they expect to complete the transaction by the end of 2024.