May 28, 2024 | Technology | Europe | Active

Darktrace / Thoma Bravo: Deal Insight

On 26-Apr-24, British cybersecurity firm Darktrace agreed to be taken private by US financial sponsor Thoma Bravo for $5.3bn. Under the terms of the buyout, Darktrace shareholders will receive $7.75 cash per share. This was equivalent to 620p per share at the time of the announcement (now 606p), then representing a one-day premium of 20.0%. Shareholders will have the option to receive the offer consideration in either US dollars or Sterling, with the latter being based on the latest practicable FX fixing date prior to the payment date. Darktrace currently does not pay any dividends. Thoma Bravo will fund the acquisition through a combination of both debt and equity, including an interim first lien term facility for $1.7bn and a second lien term facility for $460m. The transaction is structured as a UK scheme of arrangement and requires approval from Darktrace shareholders at a Court Meeting (75% in value of scheme shares voted) and an EGM (75% of votes cast). The scheme document was published on 23-May-24 and the shareholder meeting is scheduled to be held on 18-Jun-24. Darktrace directors (0.9%) consider the terms of the offer as fair and intend to unanimously recommend the scheme; the Directors and senior Darktrace employees collectively holding 3.4% of the target have signed irrevocable undertakings to support the scheme, even if a higher, competing offer is made. Additionally, the scheme has the support of US private equity firms KKR and Summit Partners, who collectively own 11.3% of the target, so Thoma Bravo already has 14.7% of support. Apart from shareholder approvals, the deal is subject to antitrust approvals from relevant authorities in Australia (ACCC), Austria (Federal Competition Authority), South Africa (Competition Commission), the UK (CMA), and the US (FTC / DoJ), as well as several foreign investment clearances (Australia, France, Italy, the Netherlands, Sweden, and the UK). Thoma Bravo has reserved the right to waive any of the regulatory conditions, but the shareholder vote is not waivable. Per the Cooperation Agreement, regulatory notifications were ...

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