Darktrace, a UK-based cybersecurity company known for its AI-enabled threat detection capabilities, is set to go private in a deal valued at approximately $5 billion. The deal is being led by private equity firm Thoma Bravo through a new entity called Luke Bidco Ltd. Thoma Bravo has offered an all-cash bid of £6.20 ($7.75) per share, representing a 44% premium on Darktrace’s average price for the three-month period ending April 25.
While the premium drops to 20% when compared to Darktrace’s closing price the day before the announcement, the company’s shares have been steadily rising since the beginning of the year, reaching £5.18 in the past month. This upward trend reflects investor confidence in Darktrace’s AI-driven approach to identifying and preventing cyber threats.
Founded in 2013 in Cambridge, Darktrace has garnered a reputation for its machine learning capabilities that can identify abnormal network activity, ransomware attacks, insider threats, and data breaches. With prominent customers such as Allianz, Airbus, and the City of Las Vegas, Darktrace has established itself as a leader in the cybersecurity industry.
Prior to its decision to go private, Darktrace raised $230 million in venture capital funding and went public on the London Stock Exchange in April 2021 with an initial valuation of $2.4 billion. Its shares reached an all-time high of £9.45 but dipped to a low of £2.29 last February. However, they have not fallen below £4 since March.
The valuation of Thoma Bravo’s offer amounts to $5.3 billion (£4.25 billion) on a full-diluted basis, which considers all convertible securities and provides a comprehensive view of the company’s worth. The enterprise value, including debt and cash positions, stands at approximately $4.9 billion (£4 billion).
This move towards privatization is part of a trend in the tech industry. Vista Equity recently announced plans to acquire revenue optimization platform Model N in a $1.25 billion take-private deal, marking its fifth such transaction in 18 months. Thoma Bravo itself has been active in this space, having recently taken critical event management software company Everbridge private in a $1.8 billion deal.
Thoma Bravo sees Darktrace as an attractive opportunity to increase its exposure to the rapidly growing cybersecurity market. Andrew Almeida, a partner at Thoma Bravo, expressed admiration for Darktrace’s cutting-edge cybersecurity technology and its artificial intelligence capabilities. He emphasized the need for constant innovation in response to complex and sophisticated cyber threats.
Darktrace had previously rejected offers from Thoma Bravo, citing them as too low. However, with the amended bid, the companies have resolved their differences. Darktrace’s chair, Gordon Hurst, believes that the proposed acquisition will not only provide an attractive premium for shareholders but also give Darktrace access to Thoma Bravo’s expertise and financial support, ultimately enhancing its position as a leading UK-based cyber AI business.
While the deal is still subject to shareholder approval, both parties anticipate completing the transaction by the end of 2024. This move could have significant implications for Darktrace’s future growth and development in the cybersecurity industry.