The London Stock Exchange is dealt a blow by Thoma Bravo’s offer for the UK company
The cybersecurity and AI startup Darktrace, located in Cambridge, is expected to be acquired by US private equity firm Thoma Bravo for $5.3 billion (£4.2 billion). This action, which saw Darktrace’s bid 44% over its three-month average share price, is in line with a pattern of American companies acquiring British tech companies. Mike Lynch, a co-founder of the business, is presently on trial in the US on charges of conspiracy and fraud.
When Darktrace announced the acquisition, it poked fun at the London stock market by claiming that Thoma Bravo had undervalued its technology, which was hailed as “cutting edge”. The board of the company told investors that the company’s financial and operational performance had not been fairly reflected in its value, and that its shares were trading at a significant discount to those of its competitors around the world.
The claim is likely to increase worries that the US, which is looking for more avenues for fundraising, could replace the FTSE as the home of prestigious company listings. Flutter, CRH, and Arm Holdings are among the recent withdrawals. Anglo American recently turned down an offer from BHP, which is listed in Australia, but they might consider a greater offer. Shell has hinted at a possible exit from the London stock market.
Darktrace emphasised that Thoma Bravo’s offer will guarantee share value to shareholders and foster the company’s expansion in a secure, private setting.
After suspending purchase negotiations in 2022, Thoma Bravo has now made a cash offer for Darktrace, valuing the company at $7.75 per share, or approximately 620p. Compared to its valuation of 250p when it went public in London in 2021, this is a huge improvement.
Experts point out that Darktrace’s valuation has lagged behind its rivals despite its well-regarded cybersecurity solution, which uses AI to detect and eliminate threats in IT networks.
The business has had trouble allaying lingering rumours about British IT entrepreneur Lynch, one of its co-founding investors. Lynch and his spouse, Angela Bacares, own 6.8% of Darktrace, despite Lynch not having an official position inside the company. The sale of the couple’s shares might bring in around £300 million.
This might help Lynch pay for his legal fees as he challenges claims that he was a major player in a significant fraud. Hewlett-Packard, a major US computer corporation, allegedly overpaid Lynch’s business, Autonomy, in a $11.1 billion agreement in 2011 as a result of the scam.
HP cut down Autonomy’s value by $8.8 billion less than a year after the acquisition, claiming significant accounting violations involving Lynch and other high-ranking colleagues.
Lynch has continuously denied any misconduct, entered a not guilty plea, and maintained his innocence.
CEO of Darktrace Poppy Gustafsson was formerly thought of as Lynch’s apprentice. She has, nevertheless, stressed the business’s separation from its co-founding investor throughout his continuing trial and extradition battle.
“From our Cambridge headquarters, we are developing a world-leading company that employs a unique form of artificial intelligence to tackle the societal challenge of cybersecurity,” Gustafsson said in a statement made public on Friday. We are entering a new phase of our growth adventure with this proposed offer, and I am excited about all the potential that lie ahead. In a world where AI-driven cyberattacks are becoming a bigger threat, our technology is more important than ever.”
“We are expanding our product portfolio, entering new markets, and committed to delivering for our customers, partners, and colleagues.”
With its main office located in Chicago and an asset management portfolio valued at over $138 billion by the end of 2023, Thoma Bravo is one of the biggest software and cybersecurity investors globally.
“Darktrace is at the forefront of cybersecurity technology, and we have long admired its platform and artificial intelligence capabilities,” said Thoma Bravo partner Andrew Almeida. In reaction to more sophisticated, worldwide, and complex cyberthreats, the cybersecurity landscape is changing quickly.”