British cybersecurity star Darktrace agrees to a £4.3 billion private equity takeover
- Darktrace has received an offer from American private equity firm Thoma Bravo
- Chicago-based Thoma Bravo has investments in dozens of software developers
Darktrace could be the latest high-profile name to leave the London Stock Exchange after agreeing to a $5 billion (£4.3 billion) takeover bid by a US private equity firm.
The cybersecurity firm has agreed terms with Thoma Bravo, which tried to acquire Darktrace two years ago until talks collapsed.
Thoma Bravo is now offering £6.20 per share, 20 per cent higher than Darktrace’s closing price on Thursday and a 44.3 per cent premium on the average share price over the past three months.
Takeover bid: Cybersecurity company Darktrace has received an offer from American private equity firm Thoma Bravo, which tried to acquire Darktrace two years ago
The company believes the acquisition represents an “attractive opportunity” to increase its presence in the cybersecurity sector, accelerate the group’s growth and boost the development of artificial intelligence products.
The Chicago-based company has already invested in dozens of software developers, such as British security software vendor Sophos, which it bought for £3 billion four years ago.
If Thoma Bravo buys Darktrace, it would be another blow to London’s shrinking public markets, which have recently lost several leading companies to foreign buyers.
Well-known acquisitions in recent years include G4S, Hotel Chocolat, Dechra Pharmaceuticals, supermarket chain Morrisons and fashion brand Ted Baker.
UK-listed companies are seen as easy targets for takeover due to their perceived undervaluation compared to competing global peers and the depreciation of the pound since the Brexit referendum.
Darktrace told investors on Friday that its financial and operating performance has not been “proportionately reflected” in its valuation.
Gordon Hurst, chairman of Darktrace, said: ‘The offer represents an attractive premium and an opportunity for shareholders to receive the certainty of cash compensation at fair value for their shares.’
Darktrace Stocks rose 17.5 percent to 607.4p on Friday afternoon after the deal was announced, more than double its share price of 250p.
The share price has undergone significant turbulence since listing in April 2021, initially rising to over £10 before plummeting after broker Peel Hunt claimed Darktrace was significantly overvalued.
The company was later targeted by short sellers ShadowFall and Quintessential Capital Management, with the latter accusing it of questionable accounting practices.
An independent review by accountant EY identified “a number of areas” where Darktrace could make improvements, but said none of the company’s previous financial statements needed correction.
Headquartered in Cambridge, Darktrace uses artificial intelligence in software to protect organizations against cyber threats such as ransomware, email phishing and software-as-a-service attacks.
Its clients include the Royal Mint, satellite operator OneWeb, cruise giant Royal Caribbean and power generation supplier Drax Group.
Entrepreneur Mike Lynch, who is on trial in San Francisco accused of fraud at Autonomy, a company he sold to HP in 2011, was one of Darktrace’s early backers.
Lynch, who has pleaded not guilty to 16 charges of conspiracy and fraud, and his wife would make around £300 million if Thoma Bravo bought Darktrace.
Dan Ridsdale, head of technology at Edison Group, said: ‘The (takeover) deal is certainly a blow to the UK stock market, which is losing one of the few structural growth technology companies of significant size.
‘Ultimately, a market that is underweight on structural growth will underperform one in which it is well represented, and that is what we have seen from Britain in recent years.’