The Cambridge-based cybersecurity and artificial intelligence company Darktrace is likely to become the latest British technology champion to be swallowed up by a US suitor, after it agreed a $5.3bn (£4.2bn) sale to US private equity business Thoma Bravo.
Darktrace, whose co-founding investor Mike Lynch is now on trial for fraud and conspiracy in the US, agreed to an offer 44% higher than its average share price over the past three months.
Announcing the deal, the company fired a Parthian shot at the under-pressure London stock market, saying its technology, described as “cutting edge” by Thoma Bravo, had been undervalued.
In a statement to investors, the Darktrace board said that its “operating and financial achievements have not been reflected commensurately in its valuation, with shares trading at a significant discount to its global peer group”.
The comment will fuel fears that the FTSE is haemorrhaging prestigious company listings to the US, in search of greater fundraising potential. Recent departures include the chipmaker Arm Holdings, the gambling company Flutter and the building materials business CRH.
Shell has hinted it could leave the London stock market, while the miner Anglo American on Friday rejected an offer from the Australia-listed rival BHP but could yet succumb to a higher offer.
Darktrace said the offer from Thoma Bravo would give its shareholders certainty about the value of their shares and enable the company to grow in a “stable and private” setting.
Thoma Bravo, which walked away from previous takeover talks in 2022, made a cash offer that values Darktrace at $7.75 a share, or about 620p, compared with its valuation of 250p when it floated in London in 2021.
Despite its widely admired cybersecurity technology, which uses AI to detect and kill threats within IT networks, analysts have said that Darktrace’s valuation has lagged behind its peers.
The company has struggled to shake off lingering concerns linked to its founding co-investor, the British tech entrepreneur Lynch, who has no formal role within the company but owns 6.8% with his wife, Angela Bacares.
Between them, the couple will make just under £300m from the sale of their shares.
That could help fund Lynch’s legal bills, as he fights allegations that he was the “driving force” behind a massive fraud that led the US tech firm Hewlett-Packard to overpay significantly, when it bought Lynch’s business, Autonomy, for $11.1bn in 2011.
HP wrote down the value of its acquisition by $8.8bn less than a year later, alleging serious accounting irregularities on the part of Lynch and several senior colleagues.
Lynch has pleaded not guilty, having always denied allegations of wrongdoing.
Darktrace’s chief executive, Poppy Gustafsson, was seen as a protege of Lynch but has stressed the company’s distance from its co-founding investor during his fight against extradition and the ongoing trial.
In a statement on Friday, she said: “From our base in Cambridge, we are building a world-leading company using a unique form of artificial intelligence to address the societal challenge of cybersecurity.
“This proposed offer represents the next stage in our growth journey and I am excited by the many opportunities we have ahead of us. Our technology has never been more relevant in a world increasingly threatened by AI-powered cyber-attacks.
“In the face of this, we are expanding our product portfolio, entering new markets, and focused on delivering for our customers, partners and colleagues.”
Thoma Bravo, based in Chicago, is one of the world’s largest software and cybersecurity investors, with more than $138bn of assets under management as of the end of 2023.
The Thoma Bravo partner Andrew Almeida said: “Darktrace is at the very cutting edge of cybersecurity technology, and we have long been admirers of its platform and capability in artificial intelligence. The pace of innovation in cybersecurity is accelerating in response to cyber threats that are simultaneously complex, global and sophisticated.”
