Sophos Ltd. is acquiring Secureworks Corp., a fellow provider of cybersecurity software, in a deal worth $859 million.

The companies announced the transaction today. It values Secureworks at $8.50 per share, a 28% premium over the software maker’s 90-day volume-weighted average price. The deal is not unexpected: Reports that Secureworks could be acquired have been circulating since August.

The acquisition comes five years after Sophos was itself bought by Thoma Bravo for $3.9 billion. The U.K.-based company sells software that organizations use to protect employee devices, servers and other systems from hackers. Sophos also offers a collection of hardware products, most notably firewall appliances that use artificial intelligence to block malware.

The company’s other major source of revenue is its managed services business. Sophos helps enterprises scan their infrastructure for vulnerabilities and detect when hackers attempt to exploit those vulnerabilities. Additionally, customers can have the company’s cybersecurity professionals remediate any issues that may be detected during the analysis.

Secureworks, in turn, is a former Dell Technologies Inc. subsidiary that has been trading on the Nasdaq since 2016. The server maker remains its majority shareholder. Secureworks’ technology is used by about 2,000 organizations worldwide as of early August.

The company’s product portfolio is headlined by a collection of three cybersecurity applications called the Taegis suite. One application helps enterprises spot vulnerabilities in their infrastructure, while another detects hacker activity across systems such as servers and employee laptops. The third Taegis service, which debuted in August, spots malicious network traffic.

Secureworks’ revenue declined to $82.2 million last quarter from $93 million a year earlier. The company attributed the sales drop to the wind-down of a legacy cybersecurity business. Revenue from the Taegis software suite, in contrast, climbed during the same time frame to $71.2 million.

The Secureworks deal is set to buy Sophos not only an additional product portfolio and a customer base with potential upselling opportunities, but also valuable data. 

Secureworks recently disclosed that it has more than 50 petabytes’ worth of cybersecurity telemetry. This dataset, which the company expands regularly with new logs, could help enhance the AI models that underpin many of Sophos’ products. The more data is available to an AI model about the task it’s designed to perform, the more capable it becomes. 

Sophos expects to complete the acquisition early next year. Most of the $859 million that the company is offering will go to Dell, which had a nearly 80% stake in Secureworks as of early August.

The transaction is the latest in a series of high-profile cybersecurity acquisitions involving Thoma Bravo or its portfolio companies. In April, the private equity firm inked a $5.3 billion deal to buy U.K.-based Darktrace plc. It earlier acquired SailPoint Technologies Holdings Inc. for the second time in a decade.

Photo: Sophos