Darktrace Shares Plummet as Takeover Deal Collapses

Shares in Darktrace tumbled more than 30% on Thursday (Sept. 8) morning after private equity group Thoma Bravo announced it would not make an offer for the British cybersecurity firm.

In a statement reported in the Financial Times, Darktrace said “early stage discussions took place with Thoma Bravo about a possible offer for the company but an agreement could not be reached on the terms of a firm offer.”

While Thoma Bravo has given no reason for walking away from the deal, reporting upon the stock market devaluation the Guardian noted that Darktrace’s founder and 12% shareholder Mike Lynch is fighting extradition to the U.S. on fraud charges relating to the sale of his previous tech business — Autonomy.

When it floated on the London Stock Exchange in April last year, Darktrace admitted there was a risk it could face potential money-laundering charges, should the proceeds of the Autonomy sale be found to have helped fund its growth.

Association with the Autonomy scandal didn’t seem to dampen investor interest, however, and within six months Darktrace’s share price had more than tripled, from £2.50 at IPO to £9.40.

Last October, however,  the stock plummeted after the brokerage Peel Hunt published a note saying the company was worth half its market cap, arguing that the potential customer base it was targeting was not as big as the company claimed.

News that Thoma Bravo was considering a bid to privatize Darktrace helped it recover some of its October losses but any gains were wiped out upon Thursday’s revelation.

With a portfolio that spans some of the biggest names in cybersecurity globally, Thoma Bravo is one of the most active investors in the sector. Some of the firm’s biggest investments this year include the acquisitions of SailPoint Technologies for $6.9 billion and Ping Identity for $2.8 billion.

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