Antivirus vendor Sophos has concluded its acquisition of Utimaco Software, a seller of data encryption software. With the acquisition, Sophos gets a sizeable foothold in the endpoint data.
Sophos plans to continue pursuing strategic acquisition opportunities in emerging technologies following the $3.9 billion sale of the SMB platform security stalwart to Thoma Bravo.
Bloomberg the Company & Its Products The Company & its Products Bloomberg Terminal Demo Request Bloomberg Anywhere Remote Login Bloomberg Anywhere Login Bloomberg Customer Support Customer Support. Sophos announced on Monday that it has acquired Cyberoam Technologies, an Ahmedabad, India-based network security company. The acquisition expands Sophos' portfolio in network security, and will combine Cyberoam's Unified Threat Management (UTM), next-generation firewalls with Sophos' existing security UTM and wireless security offerings.
The Abingdon, U.K.-based vendor’s recent acquisition into the cloud security, managed detection and response, managed threat response, and anti-ransomware spaces have worked well for Sophos, said CEO Kris Hagerman. And as Sophos has increased its scale and continues to build out into its API-rich Sophos Central console, Hagerman said the company’s M&A opportunities should increase.
“I certainly expect you'll see more of that [under Thoma Bravo],” Hagerman told CRN. “And, if anything, I would expect probably a little more than what we've done in the past, rather than less.”
[Related: 10 Things To Know About The Planned $3.82 Billion Thoma Bravo-Sophos Deal]
The company has made seven acquisitions over the past half-decade. Those deals including the $120 million Invincea purchase in 2017 aimed at boosting Sophos’ capabilities around AI and machine learning and the $31.8 million buy of anti-ransomware player Surfright in 2015. Sophos has also sprinted out of the gates with a managed threat response offering based off its 2019 acquisitions of Rook Security and DarkBytes, Hagerman said.
Sophos officially excited the public market Monday four and a half years after its initial public offering following the close of Thoma Bravo’s $3.9 billion acquisition of Sophos. The deal represents the biggest equity check written in the history of the Chicago and San Francisco-based private equity giant, according to Hagerman.
Sophos Acquisitions
“It’s a big commitment from them,” Hagerman said. “We’re proud of it.”
Thoma Bravo has moved aggressively into the cybersecurity space over the past two years with the purchases of Barracuda Networks, LogRhythm, Imperva, Veracode, Centrify and Idaptive, and staked a claim in the IT service management space by acquiring Continuum and ConnectWise and then brought the two entities together as a single company in October 2019.
Hagerman said there’s an opportunity to have discussions with other security and IT services companies under the Thoma Bravo umbrella, and would consider any partnerships that are jointly beneficial. However, Thoma Bravo is primarily interested in driving the success of its individual portfolio companies, and Hagerman said they’ve indicated they intend to run Sophos as an independent entity.
Both Hagerman and Sophos’ existing management team are expected to stay around under Thoma Bravo, and Hagerman said no material restructuring of the Sophos business is expected. Sophos CFO Nicholas Bray left the company in November after nine years in the role to take the CFO position at travel commerce platform Travelport.
FlightPath IT began working with Sophos a year ago so that it could bring endpoint protection and desktop encryption together as part of a single offering, according to Vice President Thomas Bechard.
Bechard said he appreciated that Intercept X provided multi-tenancy while at the same time allowing policies to be customized for individual users.
Under Thoma Bravo, Bechard said he’d like to see Sophos revamp its interface to reduce the learning curve for new users. The interface today is functionally great but not very intuitive, meaning that FlightPath IT has to spend a fair amount of time training customers how to use the custom policy management features, said Bechard.
Hagerman, meanwhile, said Sophos has in recent years done a good job of pivoting to next-generation offerings, which now represent 60 percent of the company’s entire business, growing by 44 percent on a year-over-year basis. The company has also grown its MSP business by 75 percent on a year-over-year basis, according to Hagerman.
All told, Sophos grew its revenue to $365.8 million in the first six months of fiscal 2020, which ended Sept. 30, 2019, up 4.7 percent from $349.5 million in the first half of the 2019 fiscal year.
Sophos Acquisition Center
“We really like the position we’re in,” Hagerman said. “This transition that we’re driving continues to pick up steam.”
Thoma Bravo takes control over Sophos at a time when many of its top competitors are going through major transitions. Symantec has walked away from much of its business outside the upper enterprise after being purchased by Broadcom; McAfee got a new CEO and is reported to be seeking a new private equity buyer; and Webroot was sold to Carbonite, which was in turn sold to OpenText.
“Some of the largest companies in security are really struggling, stumbling or having real disruption issues, and we’re coming into a period of extraordinary strength and momentum,” Hagerman said. “And so we are extremely excited about what the next chapter may hold for us.”
British cybersecurity company Sophos announced today that its acquisition by Thoma Bravo is now complete.
The private equity firm snapped up the company in a cash transaction that values Sophos at $3.9bn. Under the terms of the agreement, Sophos stockholders will receive $7.40 USD per share.
The acquisition offer was first announced on October 14, 2019. Stockholders voted to approve the transaction on December 3, 2019.
Sophos was founded by Jan Hruska and Peter Lammer and began producing its first antivirus and encryption products in 1985. Today the company serves more than 400,000 organizations in over 150 countries from its headquarters in Abingdon, Oxfordshire.
The company currently partners with more than 53,000 resellers and managed service providers to protect over 420,000 organizations and 100 million global users from advanced cyber-threats.
Sophos CEO Kris Hagerman said: 'Sophos is excited to work with Thoma Bravo as we begin our next chapter of growth and success, continuing in our mission to deliver the world’s most effective next-generation cybersecurity technology.'
Hagerman predicted that partnering with Thoma Bravo would speed up Sophos' journey to becoming a leader in next-gen cybersecurity—a journey that he says is well under way.
'Our transition to become a fully next-gen cybersecurity leader continues to rapidly progress. Last quarter, our next-gen product portfolio represented over 60% of our entire business and grew 44% year-over-year. And very recently, we launched our most significant network security technology ever, the Sophos XG Firewall with Xstream architecture,' said Hagerman.
'With Thoma Bravo as a partner, we believe we can accelerate our progress and get to the future even faster, with dramatic benefits for our customers, our partners and our company as a whole.'
Forty-year-old firm Thoma Bravo has been operating an investment strategy of buy-and-build in the software and technology industries for nearly 20 years, acquiring more than 200 companies representing over $500bn of value.
Sophos Acquisition
'Sophos has been constantly raising the bar with its industry-leading synchronized security, advanced deep learning technology and rapid growth within the MSP (managed service provider) channel,' said Seth Boro, a managing partner at Thoma Bravo.
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'We are excited to partner with Sophos to help build upon their success as they further drive innovation in cybersecurity.'