Darktrace, a prominent cybersecurity company based in Cambridge, UK, has consented to go private in a transaction valued at $5 billion. The acquisition, led by prominent private equity firm Thoma Bravo, represents a significant premium on Darktrace’s average share price over the past three months, signaling a 44% increase. The transaction, subject to shareholder approval, is anticipated to be finalized by the end of 2024.
Darktrace, established in 2013, has gained recognition for its AI-powered threat detection capabilities. Utilizing machine learning algorithms, the company identifies unusual network activity, ransomware attacks, insider threats, data breaches, and other malicious activities. Renowned organizations such as Allianz, Airbus, and the City of Las Vegas are among Darktrace’s clientele.
Following a successful funding round that attracted $230 million in venture capital and propelled the company to a private valuation of $1.65 billion, Darktrace made its public debut on the London Stock Exchange in April 2021, achieving an opening-day valuation of $2.4 billion. Its shares reached an all-time high of £9.45 later that year, but subsequently plummeted to an all-time low of £2.29 in February 2023. However, since the start of the year, the company’s shares have been on a steady upward trajectory, remaining above £4 since early March.
The comprehensive valuation based on Thoma Bravo’s offer amounts to $5.3 billion (£4.25 billion) on a fully diluted basis, encompassing all convertible securities. This approach provides a more comprehensive perspective of the company’s valuation. Notably, the enterprise value in this instance is approximately $4.9 billion (£4 billion), incorporating additional factors such as debt and cash positions.
Thoma Bravo’s acquisition of Darktrace is part of a broader trend of ‘take-private’ deals, where private equity firms acquire publicly traded companies and take them private. In recent months, Vista Equity announced plans to acquire Model N, a revenue optimization platform, in a $1.25 billion deal, marking its fifth take-private transaction within 18 months. Similarly, Thoma Bravo acquired Everbridge, a critical event management software company, in a $1.8 billion transaction last month.
In an investor relations document released today, Thoma Bravo expressed its enthusiasm for the acquisition, highlighting Darktrace’s ‘attractive opportunity’ to expand its presence in the rapidly growing cybersecurity market. ‘Darktrace is at the cutting edge of cybersecurity technology, and we have long admired its platform and AI capabilities,’ stated Andrew Almeida, a Thoma Bravo partner. ‘The cybersecurity landscape is constantly evolving, demanding innovative solutions to combat increasingly complex, global, and sophisticated cyber threats.’
Darktrace acknowledged that it had previously rejected approaches from Thoma Bravo due to unsatisfactory offer valuations. However, the revised bid has evidently resolved these concerns.
‘The proposed offer represents an attractive premium and provides shareholders with the certainty of a cash consideration at a fair value for their shares,’ said Gordon Hurst, Darktrace’s chairman. ‘This acquisition will give Darktrace access to a robust financial partner in Thoma Bravo, renowned for its expertise in the software sector. This partnership will strengthen our position as a best-in-class cyber AI enterprise headquartered in the UK.’
The deal is subject to shareholder approval. Should it be approved, the transaction is expected to close by the end of 2024, pending regulatory approvals and other customary closing conditions.
