Sophos Private Equity
- And SAN FRANCISCO— Sophos, a global leader in next-generation cybersecurity, today announced the completion of its acquisition by Thoma Bravo, a leading private equity firm focused on the software and technology-enabled services sectors, in a cash transaction that values Sophos at approximately $3.9 billion.
- Sophos Group plc is to be taken private in a £3bn deal with San Francisco-based equity fund Thoma Bravo. Investors in the FTSE 250 cybersecurity company will be offered 583p for each share, a 37%.
- With all that competition in mind, Sophos was considering several financial moves. Sources say the company had kicked around a potential IPO in recent years but the recession sidetracked those plans. Fast forward to the present and the private equity route apparently offered less risk. Enter Apax Partners, a private equity investment firm.
Private equity giant Thoma Bravo has offered to purchase Sophos for $3.82 billion less than four and a half years after the SMB platform security stalwart went public.
Thoma Bravo, with headquarters in Chicago and San Francisco, said the proposed acquisition of Abingdon, U.K.-based Sophos would fit the private equity firm’s global strategy of investing in and growing software and technology businesses. The 583 pence per share ($7.40 per share) deal represents a 37.1 percent premium over Sophos’ Friday closing price of 425.5 pence per share ($5.30 per share).
Sophos’ board of directors has recommended to its shareholders that they accept a bid by the private equity firm Thoma Bravo to purchase the cybersecurity firm.
“They know the space, and they know what’s necessary to succeed and drive innovation and growth and operational performance to accelerate both the top line and bottom line,” Sophos CEO Kris Hagerman told CRN. “They’ve worked with a lot of cybersecurity companies, so they’ve seen a lot of different business models.”
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[Related: New Sophos Managed Threat Response Tool Lowers Noise From Data]
Specifically, Hagerman said Sophos’ board felt the acquisition by Thoma Bravo could help the company boost its progress around next-generation network and endpoint security technologies. Thoma Bravo’s deep security expertise should help with everything from strategic consideration of M&A to expanding and accelerating the company’s MSP, subscription and Software-as-a-Service offerings, Hagerman said.
“Sophos has a market-leading product portfolio and we believe that, by applying Thoma Bravo's expertise, operational framework and experience, we can support the business and accelerate its evolution and growth,” Thoma Bravo Managing Partner Seth Boro said in a statement.
Sophos’ stock is up 154.30 pence ($1.94 per share), or 36.26 percent, to 579.80 pence per share ($7.27 per share) in trading midday Monday on the London Stock Exchange. The company’s board of directors plans to unanimously recommend the offer to Sophos shareholders, and the acquisition document indicated that 27.2 percent of Sophos shareholder votes have already been pledged in favor of the transaction.
“Thoma Bravo has deep sector expertise in cybersecurity software as well as a long and successful track record of partnering with and investing in its portfolio companies to support long-term growth and success,” Sophos Chairman Peter Gaines said in a statement. “Under Thoma Bravo's ownership we expect Sophos to accelerate its evolution and leadership in next-generation cybersecurity.”
Thoma Bravo said it plans to continue operating Sophos as a stand-alone business group, and doesn’t expect to undertake any material restructuring, material headcount reduction, or change in location to Sophos’ headquarters. However, the private equity firm does plan to reduce noncritical administrative expenses as well as go-to-market program spend that offers a lower return on investment.
The initial nonbinding acquisition proposal from Thoma Bravo came in June 2019, according to the acquisition documents.
The acquisition offer by Thoma Bravo comes nearly four and a half years after Sophos raised $125 million as part of an initial public offering that valued the company at $1.6 billion. And the IPO came five years after private equity firm Apax Partners acquired Sophos for $830 million.
Thoma Bravo has been extremely active in the cybersecurity space recently, purchasing storage and security player Barracuda Networks for $1.6 billion in February 2018; security information and event management vendor LogRhythm in July 2018; application and data protection vendor Imperva for $2.1 billion in October 2018; and application security vendor Veracode for $950 million in November 2018.
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In addition, Thoma Bravo bought a majority stake in identity management vendor Centrify in July 2018, and then in October 2018 spun off its Identity-as-a-Service business into a stand-alone company called Idaptive, which is also owned by Thoma Bravo.
[Editor’s Note: Register now to see Mike Hoffman, principal at Thoma Bravo, deliver a keynote address at the NexGen Conference, hosted by CRN parent The Channel Company, Oct. 22 – 24 in Anaheim, Calif.]
OXFORD, U.K. and SAN FRANCISCO, March 02, 2020 (GLOBE NEWSWIRE) -- Sophos, a global leader in next-generation cybersecurity, today announced the completion of its acquisition by Thoma Bravo, a leading private equity firm focused on the software and technology-enabled services sectors, in a cash transaction that values Sophos at approximately $3.9 billion. The acquisition offer was announced on Oct. 14, 2019.
Under the terms of the agreement, Sophos stockholders receive $7.40 USD, per share. The price per share represents a 168% premium to its IPO share price in June 2015. Stockholders voted to approve the transaction on Dec. 3, 2019. With the completion of the acquisition, Sophos’ common stock has ceased trading on the London Stock Exchange.
“Sophos is excited to work with Thoma Bravo as we begin our next chapter of growth and success, continuing in our mission to deliver the world’s most effective next-generation cybersecurity technology,” said Kris Hagerman, CEO, Sophos. “Our transition to become a fully next-gen cybersecurity leader continues to rapidly progress. Last quarter, our next-gen product portfolio represented over 60% of our entire business, and grew 44% year-over-year. And very recently, we launched our most significant network security technology ever, the Sophos XG Firewall with Xstream architecture. With Thoma Bravo as a partner, we believe we can accelerate our progress and get to the future even faster, with dramatic benefits for our customers, our partners and our company as a whole.”
Sophos partners with more than 53,000 resellers and managed service providers to protect more than 420,000 organizations and 100 million users from the most advanced cyberthreats. Its comprehensive product portfolio is easily managed through Sophos Central, a single, integrated cloud-based management platform where solutions work together for real-time information sharing and threat response with Sophos’ unique synchronized security approach. Sophos Managed Threat Response services provide an additional 24/7 security team for fully-managed threat hunting, detection and response spanning across endpoint and firewall.
“Sophos has been constantly raising the bar with its industry-leading synchronized security, advanced deep learning technology and rapid growth within the MSP channel,” said Seth Boro, a managing partner at Thoma Bravo. “We are excited to partner with Sophos to help build upon their success as they further drive innovation in cybersecurity.”
Additional Resources
- Discover the five TLS inspection capabilities needed in the Has Encryption Made Your Firewall Irrelevant? white paper
- Learn about the threat landscape and 2020 trends in the SophosLabs Threat Report
- Stay up to date on the latest security and company news with Naked Security and Sophos News
- Connect with Sophos on Twitter, LinkedIn, Facebook, Spiceworks, Instagram, and YouTube
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About Sophos
As a worldwide leader in next-generation cybersecurity, Sophos protects more than 400,000 organizations of all sizes in more than 150 countries from today's most advanced cyberthreats. Powered by SophosLabs - a global threat intelligence and data science team - Sophos' cloud-native and AI-enhanced solutions secure endpoints (laptops, servers and mobile devices) and networks against evolving cybercriminal tactics and techniques, including automated and active-adversary breaches, ransomware, malware, exploits, data exfiltration, phishing, and more. The award-winning Sophos Central cloud-based platform integrates Sophos' entire portfolio of best-of-breed products, from the Intercept X endpoint solution to the XG Firewall, into a single system called Synchronized Security. Sophos products are exclusively available through a global channel of more than 53,000 partners and Managed Service Providers (MSPs). Sophos also makes its innovative commercial technologies available to consumers via Sophos Home. The company is headquartered in Oxford, U.K. More information is available at www.sophos.com.
About Thoma Bravo, LLC
Thoma Bravo is a leading private equity firm focused on the software and technology-enabled services sectors. With a series of funds representing more than $35 billion in capital commitments, Thoma Bravo partners with a company's management team to implement operating best practices, invest in growth initiatives and make accretive acquisitions intended to accelerate revenue and earnings, with the goal of increasing the value of the business. The firm has offices in San Francisco and Chicago.
Press Contacts:
Lesley Sullivan, Sophos
Lesley.Sullivan@sophos.com
Samantha Powers, March Communications
sophos@marchcomms.com