Publicly traded cybersecurity provider Proofpoint Inc. today announced that it has agreed to be acquired by Thoma Bravo, a prominent private equity firm, in a $12.3 billion all-cash transaction.

The deal is set to net a sizable return for Proofpoint’s shareholders. Thoma Bravo has offered to pay $176 per share of the company, about 34% higher than where its stock stood at market close Friday. 

Proofpoint is one of the world’s largest providers of technology for blocking malicious emails. Its artificial intelligence-powered security software catches messages containing suspicious links, malicious attachments and phishing attempts. Built-in analytics features allow administrators to study the email-borne attacks targeting their organizations to find ways of enhancing their defenses.

Another factor behind Thoma Bravo’s hefty $12.3 billion offer is that Proofpoint also has a presence in another, particularly fast-growing part of the breach prevention market: cloud security.

Through a 2019 acquisition, Proofpoint obtained a zero-trust access product that companies can use to block unauthorized attempts to access cloud applications. Zero-trust access is drawing more interest from tech giants and venture capitalists alike amid growing adoption among enterprises. Proofpoint also competes in the adjacent software-as-a-service security segment, where it offers several products for securing files stored on platforms such as Microsoft 365.

Another important source of revenue growth for the company, one that Thoma Bravo may seek to expand following the deal, is its portfolio of data loss prevention products. They help companies detect and block misuse of sensitive business records. Proofpoint revealed in its fourth quarter earnings report earlier this year that the data loss prevention portfolio contributed about 20% of all new subscription billings during the quarter, which executives said creates a foundation for future “land and expand” sales. 

The company posted its latest first quarter earnings report today, alongside the acquisition announcement. Proofpoint’s security products and related consulting services together generated $287.8 million in revenues last quarter, a 15% improvement over the prior year that beat analyst expectations. 

After moving off the stock exchange, Proofpoint won’t face the same kind of pressure from short-term earnings expectations as public companies do. That should give the leadership team more room to pursue long-term growth opportunities, an effort that Thoma Bravo’s considerable resources and market expertise should advance. 

“We believe that as a private company, we can be even more agile with greater flexibility to continue investing in innovation, building on our leadership position and staying ahead of threat actors,” said Proofpoint Chief Executive Officer Gary Steele. “Thoma Bravo is an experienced software investor, providing capital and strategic support to technology organizations, and our partnership will accelerate Proofpoint’s growth and scale at an even faster pace.”

“Thoma Bravo’s approach to value creation is rooted in partnering with the organization in which we invest and looking for opportunities to both enhance their existing operations and build technology platforms that drive significant growth,” added Thoma Bravo Managing Partner Seth Boro. 

The transaction is expected to close in the third quarter. Before then, the terms of the acquisition agreement give Proofpoint a 45-day “go shop” window to see if another prospective buyer may be interested in placing a higher bid.

Image: Proofpoint