Thoma Bravo Sophos



Mar 02, 2020 Bloomberg the Company & Its Products The Company & its Products Bloomberg Terminal Demo Request Bloomberg Anywhere Remote Login Bloomberg Anywhere Login Bloomberg Customer Support Customer Support. Oct 14, 2019 Thoma Bravo is known for working with a company’s management team to implement best practices, invest in growth initiatives, drive innovation, and deliver superior operating results. “Today marks an exciting milestone in the ongoing journey of Sophos,” said Kris Hagerman, CEO, Sophos.

Back In Private Hands

Sophos potentially will walk away from the public market just four and a half years after its initial public offering following the $3.82 billion purchase offer from private equity giant Thoma Bravo. The potential acquisition of the Abington, U.K.-based SMB platform security giant would add yet another cybersecurity firm to the expansive portfolio of Chicago and San Francisco-based Thoma Bravo.

“They know the space, and they know what’s necessary to succeed and drive innovation and growth and operational performance to accelerate both the top line and bottom line,” Sophos CEO Kris Hagerman told CRN.

Sophos

Sophos protects more than 400,000 organizations across 150 countries from today's most advanced cyberthreats, securing endpoints and networks against evolving cyberattack techniques like ransomware, malware, exploits, data exfiltration, active-adversary breaches, and phishing. Sophos sells its products and services exclusively through a global channel of more than 47,000 partners and MSPs.

Here's a look at how Sophos could leverage Thoma Bravo’s expertise and track record to its advantage, the role Sophos’ existing management team would play going forward, and whether Thoma Bravo is considering deep job cuts at Sophos.

[Editor’s Note: Register now to see Mike Hoffman, principal at Thoma Bravo, deliver a keynote address at the NexGen Conference, hosted by CRN parent The Channel Company, Oct. 22 – 24 in Anaheim, Calif.]

Sophos

Private equity giant Thoma Bravo has offered to purchase Sophos for $3.82 billion less than four and a half years after the SMB platform security stalwart went public.

Thoma Bravo, with headquarters in Chicago and San Francisco, said the proposed acquisition of Abingdon, U.K.-based Sophos would fit the private equity firm’s global strategy of investing in and growing software and technology businesses. The 583 pence per share ($7.40 per share) deal represents a 37.1 percent premium over Sophos’ Friday closing price of 425.5 pence per share ($5.30 per share).

“They know the space, and they know what’s necessary to succeed and drive innovation and growth and operational performance to accelerate both the top line and bottom line,” Sophos CEO Kris Hagerman told CRN. “They’ve worked with a lot of cybersecurity companies, so they’ve seen a lot of different business models.”

[Related: New Sophos Managed Threat Response Tool Lowers Noise From Data]

Specifically, Hagerman said Sophos’ board felt the acquisition by Thoma Bravo could help the company boost its progress around next-generation network and endpoint security technologies. Thoma Bravo’s deep security expertise should help with everything from strategic consideration of M&A to expanding and accelerating the company’s MSP, subscription and Software-as-a-Service offerings, Hagerman said.

“Sophos has a market-leading product portfolio and we believe that, by applying Thoma Bravo's expertise, operational framework and experience, we can support the business and accelerate its evolution and growth,” Thoma Bravo Managing Partner Seth Boro said in a statement.

Sophos’ stock is up 154.30 pence ($1.94 per share), or 36.26 percent, to 579.80 pence per share ($7.27 per share) in trading midday Monday on the London Stock Exchange. The company’s board of directors plans to unanimously recommend the offer to Sophos shareholders, and the acquisition document indicated that 27.2 percent of Sophos shareholder votes have already been pledged in favor of the transaction.

“Thoma Bravo has deep sector expertise in cybersecurity software as well as a long and successful track record of partnering with and investing in its portfolio companies to support long-term growth and success,” Sophos Chairman Peter Gaines said in a statement. “Under Thoma Bravo's ownership we expect Sophos to accelerate its evolution and leadership in next-generation cybersecurity.”

Thoma Bravo said it plans to continue operating Sophos as a stand-alone business group, and doesn’t expect to undertake any material restructuring, material headcount reduction, or change in location to Sophos’ headquarters. However, the private equity firm does plan to reduce noncritical administrative expenses as well as go-to-market program spend that offers a lower return on investment.

Thoma bravo sophos offer

The initial nonbinding acquisition proposal from Thoma Bravo came in June 2019, according to the acquisition documents.

The acquisition offer by Thoma Bravo comes nearly four and a half years after Sophos raised $125 million as part of an initial public offering that valued the company at $1.6 billion. And the IPO came five years after private equity firm Apax Partners acquired Sophos for $830 million.

Thoma Bravo has been extremely active in the cybersecurity space recently, purchasing storage and security player Barracuda Networks for $1.6 billion in February 2018; security information and event management vendor LogRhythm in July 2018; application and data protection vendor Imperva for $2.1 billion in October 2018; and application security vendor Veracode for $950 million in November 2018.

In addition, Thoma Bravo bought a majority stake in identity management vendor Centrify in July 2018, and then in October 2018 spun off its Identity-as-a-Service business into a stand-alone company called Idaptive, which is also owned by Thoma Bravo.

Orlando Bravo

[Editor’s Note: Register now to see Mike Hoffman, principal at Thoma Bravo, deliver a keynote address at the NexGen Conference, hosted by CRN parent The Channel Company, Oct. 22 – 24 in Anaheim, Calif.]