Private equity powerhouse stumps up nearly $4bn to buy Sophos

UK vendor joins Barracuda, Connectwise and Continuum under Thoma Bravo's ownership

Sophos is set to be acquired by US-based private equity (PE) giant Thoma Bravo for $3.8bn.

The Oxfordshire-headquartered security vendor is the latest IT firm to be snapped up by the PE house, which has acquired Barracuda, Continuum and Connectwise in recent years.

LogRhythm, SolarWinds, Riverbed and McAfee are also part of the PE house's portfolio.

The proposed deal values the entire issued and to be issued share capital of Sophos at approximately $3.82bn (£3bn), implying an enterprise value of $3.9bn (£3.1bn), and is 32 times Sophos' cash flow of $124m for its year ended 31 March 2019.

The deal is subject to agreement from Sophos' shareholders, and, if successful, will see the vendor removed from the London stock exchange, where it has been publicly listed for four years.

News of the deal this morning caused Sophos's share price to jump over 36 per cent.

"It is the view of the Sophos board that this is a compelling offer for Sophos shareholders which secures the delivery of future value for shareholders today," said Peter Gyenes, Sophos chairman.

"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.

"Under Thoma Bravo's ownership, we expect Sophos to accelerate its evolution and leadership in next-generation cybersecurity.

"The Sophos board believes that this recommended offer delivers a significant opportunity for all stakeholders - our shareholders, customers, partners, and employees."

Thoma Bravo made the purchase under the name Surf Buyer Limited, a newly incorporated company formed on behalf of funds managed and advised by the PE house.

The PE firm said that the British security vendor is an "attractive opportunity" to increase its exposure to the constantly expanding cybersecurity market, as well as fingering the global reach of its channel-first distribution strategy as some of its alluring features.

Seth Boro, a managing partner at Thoma Bravo, added: "We are excited by the opportunity to partner with the Sophos management team and employees as we further develop Sophos as a best-in-class software franchise and nextgen security leader.

"The acquisition fits with our strategy of investing in and growing software and technology businesses globally. The global cybersecurity market is evolving rapidly, driven by significant technological innovation, as cyber threats to business increase in scope and complexity.

"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."