Thoma Bravo, Darktrace agree on $5 billion deal in a blow to LSE
It’s been one blow after another for the London Stock Exchange—this time, it’s a private equity deal for the U.K.-based cybersecurity firm Darktrace.
The Cambridge-based company agreed to be bought over by the American Thoma Bravo in a deal worth £4.3 billion ($5.32 billion) on Friday.
Thoma Bravo, an investment company with over $138 billion in assets under management, focuses exclusively on software deals. With its purchase of Darktrace, Thoma Bravo plans to fuel the growth of the AI and cybersecurity company founded in 2013.
“This proposed offer represents the next stage in our growth journey and I am excited by the many opportunities we have ahead of us,” CEO Poppy Gustafsson said in a statement.
This adds to a growing number of U.K.-listed companies that’ve been taken over by private equity groups. For instance, in October, Apollo Global Management, a U.S.-based private equity firm, bought the group behind restaurant chain Wagamama for £506 million, according to the Financial Times.
The Darktrace deal hasn’t been approved by shareholders yet—if green-lit, the companies said the takeover would be tentatively completed by this year’s end.
Darktrace’s shares were up 17.6% as of 1 p.m. London time.
Losing the U.K.-based Darktrace is a big blow, given the company was a shining example of the country’s sway in cutting-edge tech. The company’s shares soared after floating on the London Stock Exchange in 2021, rising 84% since—but it’s had its fair share of problems.
The U.K.-based cybersecurity specialist had been in talks with Thoma Bravo in 2022, but those talks fell through.
The company’s board said that Darktrace’s success is not reflected in its current valuations as its shares are trading lower than those of its peers.
“The proposed offer represents an attractive premium and an opportunity for shareholders to receive the certainty of a cash consideration at a fair value for their shares,” Darktrace’s board chair Gordon Hurst said in the release announcing the deal.
A tricky history
Analysts think the company is trailing behind its American rivals for various reasons—including its backing from the controversial business figure Mike Lynch, who is currently being tried in the U.S. for allegedly defrauding Hewlett Packard.
His investment firm, Invoke Capital Partners, was the founding investor of Darktrace. Autonomy, the company Lynch founded and sold to HP in 2011, was once an admired tech company in the U.K. However, HP claimed that the company’s numbers had been blown up when sold to it in a $11 billion deal. Autonomy’s CFO was sentenced to five years in prison in 2018. Lynch has denied the charges against him.
Some of Autonomy’s former employees are part of Darktrace, including its CEO Poppy Gustafsson, although they haven’t been involved in Lynch’s trial.
Still, it’s been tricky for the Cambridge-based company to distance itself from its past ties to Lynch entirely. Last year, Darktrace was the target of short sellers who claimed the company’s accounts had holes in them. Among the issues raised were also the British firm’s connections to Autonomy.
After a probe into the company by Big Four accountant EY, Darktrace’s slate was cleaned in July.
