Darktrace Agrees Sale to Thoma Bravo for $5.32 Billion

Amy Thomson, Bloomberg News

A participant works on their laptop during the Locked Shields exercise in Tallinn, Estonia, on Tuesday, April 23, 2024. The NATO Cooperative Cyber Defense Center of Excellence said the annual event is intended to boost the skills of cybersecurity experts defending national IT systems and critical infrastructure under real-time attacks. Photographer: Peter Kollanyi/Bloomberg , Bloomberg

(Bloomberg) -- UK cybersecurity company Darktrace Plc agreed to sell itself to private equity firm Thoma Bravo for an equity value of about $5.32 billion.

The deal will give Darktrace holders $7.75 in cash, or 620 pence per share, the companies said in a statement on Friday. That’s a 20% premium to the company’s closing share price on Thursday. Darktrace shares jumped 18% to 608.20 pence in London trading at 11:19 a.m. on Friday.

Thoma Bravo, which had walked away from talks to buy Darktrace in 2022 after the companies couldn’t agree on terms, said it will encourage Darktrace to invest in its platform and explore opportunities to expand in the fragmented cybersecurity market. Founded in 2013 by mathematicians and cyber defense experts, Darktrace uses artificial intelligence to check for hacks and suspicious data leaks. Its founding investor was Invoke Capital Partners, an investment firm created by embattled British entrepreneur Mike Lynch.

Lynch’s involvement in Darktrace proved to be a source of controversy for the company. Lynch is on trial for fraud in the US after Hewlett Packard Co. — which bought his previous business Autonomy Corp. in 2011 — claimed Lynch and his finance chief overinflated Autonomy’s numbers in the $11 billion transaction. Lynch denies wrongdoing. Autonomy’s former Chief Financial Officer Sushovan Hussain was sentenced to five years in prison by a San Francisco jury in 2018.

Darktrace’s leadership, including Chief Executive Officer Poppy Gustafsson, counts a number of former Autonomy employees, though they are not involved in the trial and Lynch as stepped away from the business.

Read More: Fallen Tech Star Lynch in Fight to Avoid US Prison for Fraud

Still, shortsellers have targeted the company claiming weaknesses in its accounting and drawing comparisons to Autonomy. Darktrace hired accounting firm EY last year to review “key financial processes” and shares surged in July after the company determined that its accounts wouldn’t need to be changed. The auditor did identify areas where processes could be improved, including errors in new channel contracts, and Darktrace said it shared the report with the UK’s Financial Conduct Authority.

Lynch and his wife Angela Bacares directly own a combined 48.1 million shares of Darktrace, which would be valued at about £298.2 million in the deal, according to data compiled by Bloomberg.

Investors representing approximately 14.4% of Darktrace’s shares have already agreed to the Thoma Bravo deal, the companies said on Friday. The private equity firm will need to win over 75% of shares for the deal to go through. The companies expect the takeover to be completed in the third or fourth quarter of the year.

(Updates with Mike Lynch’s family holdings in penultimate paragraph. An earlier version of this story corrected the previous day’s closing price.)