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Darktrace Acquired By Private Equity Group

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Private equity firm Thoma Bravo has agreed to buy Cambridge-based cybersecurity firm Darktrace for $5.32 billion in cash on Friday.

Darktrace’s board of directors in an investor posting have backed the acquisition, which will see a vehicle created by Chicago-based Thoma Bravo called Luke Bidco Ltd paying a 44 percent premium to a three-month average of Darktrace’s share price.

The deal will also see Darktrace taken back into private ownership, with Thoma Bravo saying it would use its software expertise to drive growth at the UK firm.

Darktrace acquisition

Darktrace was founded in 2013 by mathematics professors and former members of the UK security services.

The company uses artificial intelligence (AI) to spot threats and attacks by detecting unusual behaviour. Indeed, the firm was amongst the first to apply AI techniques to cybersecurity.

The agreed offer of $7.75, or around 620 pence, per share represents a 44 percent premium to Darktrace’s three-month average share price, Thoma Bravo said.

Shares in Darktrace, which have doubled over the last year, jumped 18 percent after the announcement to 608 pence.

Darktrace had listed on the London Stock Exchange at 250 pence in April 2021, and in 2022 Thoma Bravo had approached Darktrace, but the talks did not result in an offer at that time.

Now the US private equity group has purchased Darktrace for $5.32 billion in cash.

“I am immensely proud of our brilliant business and people,” said Poppy Gustafsson OBE, CEO of Darktrace. “From our base in Cambridge, we are building a world-leading company using a unique form of artificial intelligence to address the societal challenge of cybersecurity.”

Darktrace CEO, Poppy Gustafsson

“This proposed offer represents the next stage in our growth journey and I am excited by the many opportunities we have ahead of us,” added Gustafsson. “Our technology has never been more relevant in a world increasingly threatened by AI-powered cyberattacks. In the face of this, we are expanding our product portfolio, entering new markets, and focused on delivering for our customers, partners and colleagues.”

Thoma Bravo partner Andrew Almeida meanwhile said that Darktrace was at the “very cutting edge” of cybersecurity.

“Thoma Bravo has been investing exclusively in software for over 20 years and we will bring to bear the full range of our platform, operational expertise and deep experience of cybersecurity in supporting Darktrace’s growth,” Almeida said.

The deal is still subject to shareholder approval, but both parties said they expect to complete the transaction by the end of 2024.

Mike Lynch

Thoma Bravo has made a previous acquisition of a British cybersecurity specialist, when in 2020 it completed the acquisition of UK-based Sophos for $3.9 billion.

Thoma Bravo said it intended to keep Darktrace headquartered in the UK.

The acquisition will be welcome news for co-founding investor Dr Mike Lynch, who is now on trial for fraud and conspiracy in the US.

Dr Lynch no longer has any role at Darktrace, but is said to own a 6,8 percent stake in the firm alongside his wife, Angela Bacares.

It has been reported that between them, the couple will make just under £300m from the sale of their shares.

Those funds could help fund Dr Lynch’s legal bills, as he fights allegations that he was behind a massive fraud that led the Hewlett-Packard to overpay significantly when it bought Lynch’s business, Autonomy, for $11.1bn in 2011.

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