Thoma Bravo acquires Proofpoint in a $12.3bn deal to build its cybersecurity portfolio

Private equity Thoma Bravo inked a $12.3bn all-cash deal to acquire SaaS-based cybersecurity firm Proofpoint.

The deal, which is expected to close in the third quarter, is set to net a sizable return for Proofpoint’s shareholders. Thoma Bravo has offered to pay $176 per share of the company, about 34% higher than its stock’s last close. The deal has an equity value of $10.1bn based on shares outstanding, according to Reuters.

With the completion of the transaction, Proofpoint will become a private company and will benefit from the operating capabilities, network and capital support of Thoma Bravo whilst also being able to provide cybersecurity and compliance solutions to companies and individuals worldwide.

Proofpoint, whose platform blocks malicious emails, uses AI-powered security software that catches messages containing suspicious links, malicious attachments and phishing attempts. Its analytics feature allows administrators to monitor potential attacks to further boost their defences.

Proofpoint also revealed its first-quarter earnings, topping Wall Street estimates for revenue and profit per share. Its security products and consulting services generated $287.8m in revenue last quarter, a 15% improvement over the prior year.

Commenting on the new deal, Proofpoint CEO Gary Steele said, “We believe that as a private company, we can be even more agile with greater flexibility to continue investing in innovation, building on our leadership position and staying ahead of threat actors.

“Thoma Bravo is an experienced software investor, providing capital and strategic support to technology organizations, and our partnership will accelerate Proofpoint’s growth and scale at an even faster pace.”

Steele added that in 2020 the firm generated more than $1bn in annual revenue “making Proofpoint the first software-as-a-service-based cybersecurity and compliance company to reach that milestone.”

Sharing the same sentiment, Thoma Bravo managing partner Seth Boro added, “Thoma Bravo’s approach to value creation is rooted in partnering with the organization in which we invest and looking for opportunities to both enhance their existing operations and build technology platforms that drive significant growth.”

The deal comes at a time when the Covid-19-induced lockdown and remote working has fueled a surge in demand for network security as more businesses encounter frequent cyberattacks. In fact, cybersecurity industry funding reached an all-time high of $11.4bn last year, up 50% from 2018, according to CB Insights.

Thoma Bravo, which largely focuses on software and technology companies, has been doubling down on its investments in the cybersecurity sector. It acquired online trading services provider Calypso Technology and data solutions firm Talend in March this year.

Some notable security vendors that Thoma Bravo has within its company portfolio include Barracuda, Blue Coat, Centrify, ConnectWise, digicert, Entrust, Imperva, LogRhythm, McAfee, SailPoint, SolarWinds, Sophos, Venafi and Veracode.

Furthermore, Thoma Bravo is hardly the only firm to shift its focus to cybersecurity. More recently payment giant Mastercard acquired identity verification startup Ekata for $850m in a bid to help companies combat online fraud.

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