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One other mild of the London Inventory Alternate firmament goes out. Darktrace has accepted a £4.3bn supply from US non-public fairness investor Thoma Bravo. That the UK market’s lone cyber safety identify is leaving will, of itself, increase eyebrows. That it’s prepared to take action for a comparatively low worth is a mirrored image of its troubled life as a public firm.
None of that is speculated to indicate that Thoma Bravo’s newest supply — which follows an aborted method in 2022 — is devoid of sights. With $138bn of property below administration, it is without doubt one of the largest software-focused traders on the planet and may assist Darktrace’s technique. It could possibly use its clout to assist the UK group increase its US shopper base. And it will possibly present Darktrace with capital and M&A experience to snap up different firms within the fragmented cyber safety house.
Financially, nevertheless, Thoma Bravo’s bid doesn’t appear like a knockout. True, at 620p a share Darktrace is getting a 44 per cent premium on its three-month common share worth, and a 148 per cent premium on its IPO worth three years in the past. That will clarify why long-term traders KKR and Summit Companions have dedicated to tender their 11 per cent of the corporate, as have administrators and insiders with an extra 3 per cent.
However that isn’t the entire story. Darktrace has lengthy been poorly valued. Even on the supply worth, it is just value 7.3 instances 2024 gross sales, on Panmure Gordon estimates. In contrast, US cyber safety group CrowdStrike trades at 17 instances revenues, and Palo Alto at 11.5 instances. These firms are giants, in comparison with Darktrace, and scale instructions a premium. But it’s laborious to shake the impression that Darktrace could also be promoting itself cheaply, particularly given its enhancing outcomes and the latest share worth run.
By accepting Thoma Bravo’s supply, in fact, Darktrace has in impact put itself in play. “Irrevocable” commitments, like these made by 14.4 per cent of shareholders, will be undone. Different suitors could but emerge, pushing up the premium.
However the cyber specialist, nonetheless among the many higher performers of the IPO crop of 2021, has had a really bumpy three-year trip as a public firm. It has needed to cope with accounting issues, vocal quick sellers and its uncomfortable affiliation with Autonomy’s Mike Lynch, Darktrace’s co-founder who’s dealing with a fraud trial within the US the place he has pleaded not responsible.
All that comes earlier than you get to the much-discussed and debated valuation low cost for UK-listed shares. Maybe it’s little surprise that Darktrace didn’t maintain out for high greenback.
camilla.palladino@ft.com