Shares in cyber-security group Sophos (SOPH) soared by over a third on the news that it has received a $7.40 (583p) a share takeover offer from private equity firm Thoma Bravo. This offer represents a 37.1 per cent premium to Sophos’s closing price of 425.5p on 11 October (the last business day preceding the announcement) and a 45.6 per cent premium to the daily volume-weighted average price of 400.6p a share over the past six months. Overall, it gives Sophos an implied enterprise value of $3.9bn; 32 times its free cash flow of $124m for the year to March 2019.
For Thoma Bravo, the acquisition “represents an attractive opportunity to increase its exposure to the large and growing cybersecurity market”. Thoma notes that Sophos is differentiated in areas including “the innovation and effectiveness of its next-generation security offerings” and its ability to manage its products in one cloud-based management platform.
Sophos’s directors plan to unanimously recommend that shareholders vote in favour of the deal. Including of the directors’ irrevocable undertakings, Thoma has received other irrevocable undertakings representing around 28.4 per cent of Sophos’s issued share capital. If approved, the takeover is expected to complete during the first quarter of 2020.