Next Big Thoma Bravo Acquisition Could Be Darktrace, Taking it Private

Thoma Bravo is pursuing an acquisition of Darktrace, which could take the company private after going public in spring 2021.

Darktrace confirmed the acquisition talks with Thoma Bravo in a filing with the London Stock Exchange. The company is based in the United Kingdom.

Darktrace said it’s in the early stages of discussions with Thoma Bravo. That’s regarding a possible cash offer for the entire issued and to be issued share capital of the company.

“Discussions are at a preliminary stage and there can be no certainty that any offer will be made, nor as to the terms of any such offer,” it said.

According to regulation, Thoma Bravo must either make an offer for Darktrace or announce that it doesn’t intent to make an offer by Sept. 12.

We couldn’t reach Thoma Bravo for comment.

Going Public

Darktrace started trading publicly with its initial public offering (IPO) in April 2021. It’s an artificial intelligence (AI) company that specializes in cyber defense. Its portfolio is broad, and includes cloud security, threat visualization, and network detection and response (NDR).

Darktrace sells through various partner types, including VARs, MSSPs, small consulting organizations and other technology partners.

Rik Turner is principal analyst at Omdia, which shares a parent company with Channel Futures (Informa).

Omdia’s Rik Turner

“Darktrace has had its ups and downs since its IPO, enduring a very torrid few weeks a month or two after that,” he said. “I haven’t followed its stock to see how it’s doing now, but the bigger story seems to me to be that Darktrace was out ahead of the pack with the AI/ML-based approach to network security that came to be known as NDR, but that the market has rather caught up to them. There are several other names in that segment, including the likes of Vectra. But perhaps even more significant has been the growth of extended detection and response (XDR), which encompasses NDR, but adds telemetry from the endpoint, cloud and other areas such as email and identity stores for an enterprise-wide view of threats. Thus a dedicated NDR product may not be quite so attractive.”

‘Stuck In Their Chosen Groove’

Turner sees Darktrace as a “bit stuck in their chosen groove, when the market itself has kind of gone elsewhere, or grown beyond NDR.”

“Of course there are a few players still ploughing the NDR furrow (Gigamon, ExtraHop, Vectra etc.), as was Lastline until it got bought by VMware (who have rolled it up into an XDR play alongside their Carbon Black technology),” he said. “However, the XDR conversation appears to be sucking a lot of the oxygen out of the market, leaving the pureplay NDRs rather less room for maneuvering, in my humble opinion.”

That doesn’t mean Darktrace is unattractive for Thoma Bravo, Turner said.

“Indeed, they may be highly attractive, if it can do a bit of corporate engineering and merge them with some of its other multiple cyber acquisitions,” he said.

Other Thoma Bravo M&A

In the meantime, Thoma Bravo remains active in M&A. It’s acquiring Ping Identity in a $2.8 billion, all-cash deal, taking the enterprise identity management company private. Other Thoma Bravo cybersecurity acquisitions include Sophos, Proofpoint and Sailpoint Technologies.

KKR, a global investment firm, has acquired Barracuda Networks from Thoma Bravo in a deal reportedly worth about $4 billion.