Proofpoint Acquires Cyber Firm?»Veronis For $6.3 Billion
Translated & summarized from Calcalist by baba
Proofpoint is acquiring Veronis for $6.3 billion, marking a significant exit for the 20-year-old cybersecurity company. The deal, led by Thoma Bravo, is seen as a rescue operation rather than a dream outcome, as Veronis was late to adapt to cloud computing and the AI market. The acquisition is expected to generate tax revenue for Israel from its local employees, while major institutional investors will benefit most from the sale.
The story in 5 lines · by baba
- Proofpoint is acquiring Veronis for $6.3 billion, a deal described as a rescue for the 20-year-old company.
- Veronis was late to adapt to cloud computing and the current AI market, impacting its valuation.
- The acquisition is led by Thoma Bravo, which plans to streamline Veronis and leverage AI trends.
- The deal offers a premium over recent stock prices but is lower than Veronis' peak valuation.
- Israeli employees will benefit from tax revenue on stock options, while US institutions are the main shareholders.
American cybersecurity firm Proofpoint is acquiring the Israeli-founded, US-registered company Veronis for $6.3 billion in cash. The deal, which values Veronis' operations at $5.7 billion due to its substantial cash reserves, represents a significant exit for a company that has been in operation for over 20 years.
While the acquisition price offers a premium over Veronis' recent stock performance, particularly since June, the article suggests it's not a "dream deal." Veronis is described as a veteran company that was somewhat late to adapt to the cloud computing trend. The sale price reflects a multiple of approximately 8.4 times its trailing 12-month revenue, which is considered high for a software company in the current market.
Veronis' stock reached a peak in 2021, trading at over $10 billion, but has since declined significantly. A substantial drop occurred last year after the company reported weak earnings, admitting that long-term clients were not renewing their software licenses. In recent years, Veronis struggled with a slow growth rate and a late transition to the cloud, only accelerating its move to a SaaS model in the last two years. However, the market has since shifted towards AI tools, requiring Veronis to reinvent itself again.
The acquisition is being handled by private equity firm Thoma Bravo, which acquired Proofpoint in 2021 for $12 billion. Thoma Bravo is known for taking public companies private, streamlining them, and then re-selling or re-listing them. In Veronis' case, Thoma Bravo plans to merge the technologies of both companies, likely reduce Veronis' workforce, and aim for profitability by leveraging the need for data security in the AI era.
The deal is expected to generate significant tax revenue for Israel from the stock options exercised by approximately 1,000 employees at Veronis' development center in Herzliya, which constitutes about a third of its global workforce of 2,800. Institutional investors, primarily Vanguard and BlackRock, are the main beneficiaries of the sale as they hold the majority of Veronis' shares.
