Thoma Bravo acquires Sophos in $3.9bn deal

Katharine Hidalgo
14 October 2019

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US-based private equity firm Thoma Bravo has acquired security software and hardware company Sophos Group for 740 US cents per share.

The recommended cash offer represents a 37.1% premium on the unaffected share price of 425.5 pence per share on 11 October 2019.

Apax Partners, which has been a shareholder in the company since 2010, has agreed to sell its 10.15% stake, while the Sophos founders will sell their combined stake of 16.32%. The company directors have also undertaken to sell their own holdings amounting to 0.8% of existing issued ordinary share capital.

The company generated $54m in profit before tax from $711m in revenues in its most recent financial year, up from a $41m loss from $639m in the previous financial year.

At the time of publication, Sophos was trading at 579.2 pence per share, giving the company a market cap of £2.83bn.

Previous funding
3i provided £2.5m in replacement capital for Sophos in 1998. The minority stake was acquired from Oxford Seedcorn Capital. In 2002, TA Associates invested £41m for a minority stake. The deal saw 3i exit the company.

Investcorp acquired a 10% stake in the company in 2008 in a deal that saw Sophos purchase German cybersecurity business Utimaco Safeware in 2008. Prior to the buyout, Investcorp held a 24.99% stake in the Aachen-based company.

In 2010, Apax acquired a 70% stake in Sophos in a deal valued at £546m. TA Associates divested its minority stake in the deal.

Sophos achieved a valuation of £1bn when it listed on the London Stock Exchange in 2015. As part of the IPO, Apax retained a 40.1% stake in the company post-flotation, with the firm having the option to reduce this further through over-allotment. Before listing, Apax held 63.8% of the shares in Sophos through the GP's Apax Europe VII and VI funds, as well as Apax US VII. At 225 pence a share, the value of Apax's realisation in the offering was £189.67m. Investcorp's stake was reduced from 4% before the IPO to 2.5% following the flotation.

Company
Headquartered in Abingdon, Sophos employs 3,400 people. Founded in 1985, the company offers cybersecurity software and hardware around the world.

Advisers
Equity – Goldman Sachs (corporate finance); Kirkland & Ellis International (legal).
Company – JP Morgan Cazenove (corporate finance); Lazard (corporate finance); UBS (corporate finance); Slaughter and May (legal).