Private Equity Strikes Again: Thoma Bravo To Buy Barracuda Networks For $1.6 Billion

Investment titan Thoma Bravo plans to purchase Barracuda Networks for $1.6 billion, just four years after the storage and security vendor filed for an IPO.

The Campbell, Calif.-based security vendor said Chicago-based Thoma Bravo will purchase the company for $27.55 per share, or 22.5 percent higher than Barracuda's average trading price of $22.49 in the 10 days leading up to the deal. Barracuda's stock is up $3.73 (15.75%) to $27.42 per share in pre-market trading Monday.

"We believe this proposed transaction offers an opportunity for us to accelerate our growth with our industry-leading security platform," Barricuda CEO BJ Jenkins said in a statement. "Thoma Bravo has an excellent history of investing in growing security businesses, and this transaction speaks to the value and strength of Barricuda's security platform."

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Thoma Bravo said it has been impressed by Barracuda's ability to bring comprehensive offerings to customers in an increasingly hostile and complex threat environment. The deal is expected to close before Barricuda's fiscal year end of Feb. 28, 2018, and is subject to approval by shareholders and regulatory authorities.

"We believe that Barracuda is at the forefront of innovation in several highly strategic areas of the cybersecurity market and are excited to be the company's partner in the next phase of its growth," Seth Boro, a managing partner at Thoma Bravo, said in a statement.

Barracuda and Thoma Bravo didn't immediately respond to requests for additional comment.

The deal comes just weeks after Barracuda purchased Waltham, Mass.-based public cloud archiving provider Sonian to meet increased demand for compliance, analytics, and email security and management capabilities. Sonian brought 32,000 customers in 40 countries to the Barracuda ecosystem, as well as partnerships with large MSPs and software companies.

Barracuda filed for an IPO in November 2013, just one year after landing Jenkins as its CEO. The company was founded in 2003 as a security appliance vendor, and acquired Yosemite Technologies in 2009 to expand its offerings into the storage market.

Thoma Bravo made a big splash in the security market with its $3.6 billion acquisition of Riverbed Technologies in December 2014. The private equity giant teamed up with Silver Lake to buy IT infrastructure management vendor SolarWinds for $4.5 billion in October 2015, and more recently purchased IT security management vendor Continuum in June.

Barracuda's channel community will benefit from Thoma Bravo's ability to cross-leverage Riverbed's networking and connectivity capabilities, particularly as it relates to mapping, visibility and health checking, according to Michael Knight, president and chief technology officer at solution provider Encore Technology Group, Greenville, S.C.

"I think it's going to be extremely valuable for the company," said Encore Technology Group's Knight.

Being a privately owned company will give Barracuda a stronger ability to chart its own destiny according to the needs of its customers rather than having to "tap-dance to the Wall Street music," Knight said. He hopes Thoma Bravo's infusion of capital will enable Barracuda to continue driving its public cloud business, a more solidified SD-WAN toolset, and more integrated endpoint security protection.

Thoma Bravo has unloaded many of its security-focused assets in recent years, selling network security vendor Blue Coat Systems in March 2015 to Bain Capital for $2.4 billion, its interest in infrastructure-focused solution provider Sirius Computer Solutions in September 2015 to Kelso & Co., and endpoint security vendor LANdesk Software to Clearlake Capital in January 2017.

In addition, Thoma Bravo-backed identity and access management vendor SailPoint Technologies filed for a $240 million initial public offering in October, although the private equity firm is maintaining a controlling stake in the company.