Thoma Bravo’s Bidco gets Compcom approval for $5.3bn Darktrace deal

Compcom has given the regional greenlight for the Darktrace acquisition.

Lynch, a pioneering UK tech entrepreneur and founding investor of Darktrace, passed away tragically when his luxury yacht abruptly sank in the Mediterranean.

The accident also claimed the lives of his 18-year-old daughter, a prominent banker, and a lawyer.

Lynch, who was instrumental in Darktrace’s early success, and his wife Angela Bacares, owned a significant share of the company.

Despite the tragedy, insiders confirm that the deal will proceed as planned.

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An attorney specialising in M&A transactions told Fortune, “If the shares have already been voted, there is no obvious mechanism or need for further approval or action to be taken by any shareholders, including the Lynch family or estate.”

Lynch himself was embroiled in a high-profile legal battle with US tech giant HP, which accused him of accounting improprieties related to the sale of his previous company, Autonomy.

This fraud case took a bizarre turn when Lynch’s co-defendant was fatally struck by a car in the same week as the yacht tragedy, further complicating the narrative surrounding Lynch’s legacy.

Lynch connection

In 2013 Lynch co-founded Darktrace through his venture capital firm, Invoke Capital, alongside a team of Cambridge mathematicians, including current CEO Poppy Gustafsson, as well as business leaders and intelligence experts.

Darktrace, known for its AI-driven cybersecurity solutions, quickly became a standout player in the tech world.

The company raised $230.5m in funding, with Invoke Capital as its largest investor, holding a 39.5% stake at the time of its IPO in 2021.

Thoma Bravo, a software-focused private equity firm, first showed interest in acquiring Darktrace in 2022 but walked away when negotiations stalled over terms.

However, the firm returned to the table in 2023, successfully striking a deal in April to acquire Darktrace for $5.3bn.

This deal was overwhelmingly approved by Darktrace shareholders in June, solidifying Thoma Bravo’s commitment to integrating Darktrace into its growing portfolio of cybersecurity firms.

Thoma Bravo drama

While the yacht tragedy has brought the deal back into the public eye, Thoma Bravo is also grappling with ongoing legal scrutiny.

The US Department of Justice recently filed a lawsuit against RealPage, another Thoma Bravo portfolio company, accusing it of antitrust violations.

Allegations claim that RealPage’s software enabled property managers to collude and inflate rental prices, a charge that has added to the firm’s legal woes.

The acquisition of Darktrace is set to be a cornerstone in Thoma Bravo’s strategy to dominate the global cybersecurity market.

Darktrace, with its AI-powered platform capable of autonomously detecting and responding to cyber threats, complements the firm’s existing cybersecurity assets Proofpoint, Tessian, and Sophos.

A target for short sellers

Darktrace’s journey from a startup to a publicly traded company on the London Stock Exchange has been marked by rapid growth and significant milestones.

At its peak, Darktrace was valued at nearly $9bn following its IPO.

However, by the time Thoma Bravo made its successful bid in 2023, Lynch’s stake had diminished to around 3%, reflecting the shifting dynamics within the company that had become a target for short sellers.

The Darktrace acquisition is expected to close by the end of 2024, pending final regulatory approvals.

As Thoma Bravo navigates its legal challenges and the aftermath of Lynch’s death, the integration of Darktrace into its portfolio could set new benchmarks in cybersecurity.