Thoma Bravo, Darktrace Takeover Talks Terminated

Thoma Bravo, the private equity firm that’s been on a multibillion-dollar acquisition tear over the past few years, has pulled out of talks to buy U.K. security firm Darktrace after the two sides couldn’t reach agreement on a sale price.

News that the sale negotiations had collapsed sent Darktrace’s stock into a tailspin on Thursday, with its share prices plunging by more than 33 percent on the London Stock Exchange.

In a statement, Cambridge, England-based Darktrace, which specializes in AI-based security software, announced its board was confirming that “discussions with Thoma Bravo have terminated.”

In its statement via the London Stock Exchange, Darktrace, which went public in April 2021, noted it first revealed last month that it was in talks with Thoma Bravo about a potential sale.

“Discussions with Thoma Bravo were first announced on 15 August 2022, in response to media speculation, after Darktrace had received a number of unsolicited, preliminary and conditional proposals from Thoma Bravo,” the Darktrace statement said. 

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“Consistent with its fiduciary obligations to consider any credible proposal which may be capable of recommendation to Darktrace shareholders, early stage discussions took place with Thoma Bravo about a possible offer for the Company but an agreement could not be reached on the terms of a firm offer.”

Both firms issued statements on the negotiations impasse but didn’t make company representatives available for follow-up questions. 

In a Thoma Bravo statement issued to CRN, the private equity firm confirmed takeover talks had ended, but it invoked its right under British trading rules to participate in another possible round of talks, under various circumstances, within the next six months. 

Interestingly, Thoma Bravo separately announced earlier this week that it will be opening a new office in London, partly so it can “further access the region’s rich ecosystem of innovative and fast-growing software and technology companies.”

On Thursday, Darktrace reported 46 percent year-on-year revenue growth, reaching $415.5 million in its fiscal 2022 ended June 30. It posted a $1.46 million profit, compared with a $146 million loss last year.

The company also restated its revenue for fiscal 2022, saying nearly $4 million in revenue booked to 2022 should have been applied to 2021.

“The Board continues to be very confident in the Company’s future prospects,” Darktrace said in its statement about the collapsed talks with Thoma Bravo. “Darktrace remains unrelentingly focused on its mission to free the world of cyber disruption and, thereby, enhance its position as a global leader in cyber security artificial intelligence.”

In an interview with the Financial Times, Darktrace CEO Poppy Gustafsson sounded confident about the company’s future. “Thoma Bravo is a well-respected organisation with a number of cyber security investments, so it is no surprise that our world-leading technology caught their eye,” Gustafsson told the Financial Times.

“I firmly believe, and so does the board, that we still have so much more value to bring to this business as an independent company,” Gustafsson said. 

For Thoma Bravo, it was a rare negotiating setback for a firm that’s been on an acquisition roll of late. 

Last year, the firm purchased email security vendor Proofpoint for $12.3 billion.

Fresh off its blockbuster Proofpoint takeover, Thoma Bravo this past spring announced it planned to buy SailPoint, an identity security company, for $6.9 billion.

Then last month, Ping Identity, a Denver identity solutions firm, agreed to be acquired and taken private by Thoma Bravo in a deal valued at $2.8 billion.

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