Cybersecurity provider IronNet to go public by merging with blank-check company
IronNet Cybersecurity Inc. today announced plans to merge with LGL Systems Acquisition Corp., a blank-check company, in a deal that will see the cybersecurity provider become publicly traded on the New York Stock Exchange.
The pro forma enterprise value of IronNet following the merger is expected to be $927 million. That implies a $1.2 billion pro forma equity value, the cybersecurity firm said.
Blank-check companies, also known as special-purpose acquisition companies or SPACs, are entities created by investors for the sole purpose of taking another firm public. A SPAC launches with no commercial operations and raises money through a stock market listing. It then uses the money to acquire an established firm, which receives the proceedings from the listing and becomes publicly traded after the merger is complete.
Mclean, Virginia-based IronNet raised more than $110 million in private funding prior to its announcement today of the merger with LGL Systems Acquisition. The company sells cybersecurity products used by Accenture PLC, Thomson Reuters Corp. and other major enterprises.
IronNet’s software harnesses machine learning to detect malicious activity in companies’ systems. It can find threats in public cloud environments, as well as other parts of the corporate network, and provide an organization’s cybersecurity teams with data on each issue in a visual dashboard.
Part of the threat information IronNet provides is sourced through an approach the company calls collective defense. Its software allows groups of organizations, for example banks or retailers, to share data with one another about emerging threats. If one of the organizations in a group encounters a new hacking campaign, IronNet’s software quickly alerts the other members who might be targeted next so they can take the needed precautions.
“Stop defending in isolation; that’s what enterprises have been doing,” IronNet Co-Chief Executive William Welch (pictured) said in an interview on SiliconANGLE Media’s theCUBE last April (below). “They’ve been defending in isolation with no sharing, no collective intelligence. We’ve brought the power of people to come together and collectively defend when something happens.”
IronNet expects to receive about $267 million in net proceeds from the merger with LGL Systems Acquisition. The sum includes $150 million from a private investment in public equity backed by, among others, existing IronNet investors Bridgewater Associates, ForgePoint Capital and Kleiner Perkins.
IronNet’s existing stockholders will hold about 72% of the fully diluted shares of common stock in the company after the merger. After the transaction closes, IronNet plans to use the proceeds to expand its product portfolio and generate more revenue growth.
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