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Buyout firm Thoma Bravo adds Sophos to cybersecurity chest in $3.8 billion deal

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By Yadarisa Shabong

(Reuters) – U.S. private equity firm Thoma Bravo is adding Sophos Group to its cybersecurity stable, announcing on Monday a buyout deal that values the British maker of antivirus and encryption products at about $3.8 billion.

The takeover price of 583 pence per share represented a 37% premium from Sophos’s closing price on Friday. Sophos, whose customers include Under Armour Inc, Ford Motor Co and Toshiba Corp, listed in 2015 at 225 pence per share and has seen its market value double since then, although its recent results have been weak. [nL3N1ZI2RQ]

Thoma Bravo’s move for Sophos trails several other buyout deals by U.S. funds in Britain recently amid a weaker sterling. Advent recently bought engineering firm Cobham while an investment consortium led by Blackstone won control of Madame Tussaud’s owner Merlin Entertainments over the summer.

Sophos Group shareholders will get $7.40 per share in cash, which is 583 pence per share.

Sophos shares jumped nearly 38% in early trade, touching 586.8 pence in early dealing before settling at around 583 pence.

Private equity funds are increasingly targeting listed companies in Europe, as they rush to use capital ahead of a possible market downturn.

The news also sent shares of Sophos’s larger rival Avast 3.5% higher to 383.4 pence.

“The global cybersecurity market is evolving rapidly, driven by significant technological innovation, as cyber threats to business increase in scope and complexity,” Seth Boro, managing partner, at Thoma Bravo said in a statement.

Thoma Bravo, which raised billions for its latest private equity fund this year, had been targeting the cyber security sector. Late last year, it bought Imperva and another cyber security firm called Veracode from Broadcom Inc.

It was also reportedly in talks last year with multiple cybersecurity firms including McAfee and Symantec.

The deal also comes on the heels of dismal results from Sophos as it saw waning demand for cybersecurity tools and it shed a third of its value in 2018.

J.P. Morgan Cazenove, Lazard, and UBS AG London Branch were Sophos’ financial advisers and Goldman Sachs advised Thoma Bravo.

(Reporting by Yadarisa Shabong in Bengaluru; additional reporting by Pamela Barbaglia in London; Editing by Bernard Orr and Susan Fenton)

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