Thoma Bravo to acquire Proofpoint in $12.3 billion deal

It is the largest-ever acquisition of a cloud firm by venture capital

Private equity investment firm Thoma Bravo has entered into a definite agreement to acquire cyber security vendor Proofpoint, in a deal valued at $12.3 billion (£8.9 billion).

As part of the all-cash transaction, Thoma Bravo will pay a 34 per cent premium over Proofpoint's closing share price on 23rd April ($131.78), with Proofpoint shareholders set to receive $176 (£127) per share in cash.

Proofpoint will become a private firm after completion, with all 'flexibility and resources' to continue offering cybersecurity and compliance solutions to organisations worldwide.

The deal is expected to close in the third quarter of 2021. Proofpoint will maintain its current headquarters in Sunnyvale, California.

The acquisition is the largest deal for a cloud firm by private equity so far. The previous record was Hellman & Friedman Capital Partners' $11 billion (£7.9 billion) acquisition of Ultimate Software in 2019.

Thoma Bravo is trying to build a portfolio of cloud software firms, focusing mainly on companies whose growth is slowing.

Gary Steele, chairman and CEO of Proofpoint, said, "Today's announcement is a testament to the strength of Proofpoint's people-centric approach to cybersecurity and compliance and underscores our important role preventing, defending and responding to today's threats.

"We believe that as a private company, we can be even more agile with greater flexibility to continue investing in innovation, building on our leadership position and staying ahead of threat actors."

Seth Boro, a managing partner at Thoma Bravo, said that the firm was "excited" to partner with Proofpoint, which has "achieved tremendous outcomes for customers around the world."

The Proofpoint acquisition serves as further evidence that demand for cloud-based security is on the rise, driven by the continued adoption of cloud computing among enterprises and the rise in remote working.

Proofpoint was founded in 2002 by former Netscape CTO Eric Hahn. In its initial days, the firm offered an email security product to help businesses identify viruses, spam, and other threats that might contravene company policies.

The company went public in 2012, with shares initially trading at around $13. Shares hit an all-time high of $140 earlier this year, giving the company a market capitalisation of over $7 billion (£5 billion). Since the acquisition announcement, shares have jumped to over $170.

The announcement comes four days after Thoma Bravo closed the $10.2 billion (£7.4 billion) acquisition of RealPage, a global provider of software and data analytics to the real estate industry. The deal was announced in December 2020, and approved by shareholders in March this year.

Last week, Thoma Bravo announced the completion of its purchase of Calabrio, another cloud company focusing on customer experience intelligence solutions.