Endpoint Security , Network Firewalls, Network Access Control , Next-Generation Technologies & Secure Development

Thoma Bravo to Buy Sophos for $3.9 Billion

Sophos Board Will 'Unanimously Recommend' Deal to Shareholders Scott Ferguson (Ferguson_Writes) • October 14, 2019

Private-equity firm Thoma Bravo, which already has stakes in several cybersecurity companies, plans to buy U.K.-based security company Sophos in a $3.9 billion deal, the two companies announced Monday. The Sophos board will "unanimously recommend" the sale to shareholders, the company says.

Thoma Bravo will pay a premium of $7.40 per share for Sophos, or about 37 percent more than Friday's closing price of $5.35, the two companies announced.

The companies say they expect to close the deal in the first quarter of 2020 pending shareholder and regulatory approval.

String of Investments

Thoma Bravo, which is based in San Francisco, has investments in over 200 software, security and IT companies, the company says.

The firm already owns or has significant investments in several large information security firms, including Barracuda Networks, Imperva, SolarWinds and Veracode.

Thoma Bravo also is an investor in McAfee along with chipmaker Intel and TPG, another private-equity firm. These three firms are planning to unveil an initial public offering IPO for McAfee later this year, according to reports in the Wall Street Journal and other publications (see: Cybersecurity Firm McAfee Preps for Public Market Return).

The Sophos Portfolio

Sophos, which was founded in 1985, offers endpoint security, next-generation firewall, cloud security, server security and managed threat response products. It has 400,000 customers in 150 countries.

"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," says Seth Boro, a managing partner at Thoma Bravo.

Kris Hagerman, the CEO of Sophos, adds: "We continue to execute a highly effective and differentiated strategy, and we see this offer as a compelling validation of Sophos, its position in the industry and its progress.”

Thoma Bravo, a private equity firm, has made an offer to acquire Sophos. Further information is available at: https://t.co/o9QcS8dxmX pic.twitter.com/haOiyZ2Emo
— Sophos (@Sophos) October 14, 2019

Industry Consolidation

The deal between Thoma Bravo and Sophos comes at a time when the security industry is undergoing rapid consolidation, with many older firms being acquired or shopping themselves around to potential buyers.

One of the biggest of these deals was announced in August, when Broadcom revealed it would pay $10.7 billion for Symantec's enterprise security business (see: Broadcom Reaches $10.7B Deal to Buy Symantec Enterprise).

The deal between Broadcom and Symantec is also expected to close sometime in the first quarter of 2020, but is subject to regulatory approval in the U.S., Japan and the European Union, the companies say. Before the deal was announced earlier this year, Reuters reported that Thoma Bravo was also interested in buying part or all of Symantec's security business.

Following the deal between Broadcom and Symantec, VMware announced on Aug. 22 that it would acquire cloud security specialist Carbon Black for about $2.1 billion. That deal is expected to boost the virtualization giant's security portfolio, especially around endpoint and application protection (see: VMware Acquiring Carbon Black to Boost Security Portfolio).

And private-equity firm Insight Partners announced in May that it would acquire threat intelligence specialist Recorded Future in a $780 million all-cash deal. That same week also saw deals involving Palo Alto Networks and FireEye picking up smaller firms to boost their product portfolios (see: Sale of Recorded Future a Highlight of Big InfoSec M&A Week).

Meanwhile, endpoint security, threat intelligence and incident response firm Crowdstrike went public in June, raising $612 million an achieving an initial market capitalization of about $6.7 billion. As of Monday, the company's stock was trading at about $56.62, with a market capitalization of about $12.7 billion.