By Yadarisa Shabong
US private equity firm Thoma Bravo is adding Sophos Group to its cybersecurity stable, announcing a buyout deal that values the British maker of antivirus and encryption products at $3.8bn (€3.4bn).
The takeover price represented a 37% premium from Sophos’s closing price last week. Sophos, whose customers include Under Armour, Ford, and Toshiba, has seen its market value double since 2015, despite a tough 2018. It has long had a major European facility in Cork
Thoma Bravo’s move for Sophos trails several other buyout deals by US funds drawn towards the UK as the pound weakened, ahead of Brexit. Shares of rival Avast also rose, after the Sophos deal was announced.
Sophos chief executive Kris Hagerman said his company had first been approached by Thoma Bravo in June. He said:
Private equity funds are targeting listed companies in Britain. Advent recently offered to buy engineering firm Cobham, while an investment consortium, led by Blackstone, looks to take control of Madame Tussaud’s owner, Merlin.
Thoma Bravo, which raised billions for its latest private equity fund this year, had been targeting the cybersecurity sector. Late last year, it bought Imperva and another cybersecurity firm, Veracode, from Broadcom.
In 2017, it purchased Sophos’s close competitor, Barracuda Networks, which manages data security over the cloud. “The global cybersecurity market is evolving rapidly, driven by significant technological innovation, as cyber threats to business increase in scope and complexity,” said Seth Boro, managing partner at Thoma Bravo.
Neil Campling, of Mirabaud Securities, said Sophos could be “valuably merged with Barracuda to focus on the SMB (small and medium businesses) opportunities.”
Analysts at Hargreaves Lansdown cautioned investors about Thoma Bravo’s dollar-denominated deal for Sophos, adding that “should a Brexit deal be agreed, a rally in sterling could leave investors out of pocket”.