Mimecast To Be Acquired By Private Equity Firm Permira For $5.8B

The proposed deal would make Mimecast the third email security vendor to be acquired this year, with Thoma Bravo purchasing Proofpoint for $12.3 billion and OpenText agreeing to buy Zix for $860 million.

Private equity powerhouse Permira has agreed to purchase Mimecast for $5.8 billion, making it the third pure-play email security provider to be acquired this year.

The Lexington, Mass.-based company said Permira has a strong track record of supporting portfolio companies’ growth ambitions and strategic goals and has in fact been a Mimecast customer for quite some time. The deal will deliver significant, immediate cash value to Mimecast’s shareholders, according to the company. The transaction is expected to close in the first half of 2022, Mimecast said.

“This transaction follows a strategic process overseen and directed by an independent Special Committee of the Board of Directors that included discussion with a number of strategic and financial third parties,” Special Committee Chair Robert Schechter said in a statement. “We … believe that this transaction is the best path forward for Mimecast and our stakeholders.”

[Related: Mimecast Eyes Sale, Proofpoint Seen As Potential Buyer: Report]

Under the terms of the deal, Mimecast shareholders will receive $80 per share in cash, representing a 16 percent premium over the company’s Oct. 27 closing share price. A Wall Street Journal article published later the same day disclosed details regarding Mimecast’s strategic review process.

Mimecast’s stock is up $4.90, or 6.53 percent, to $79.90 per share in pre-market trading Tuesday. That’s the highest Mimecast’s stock has traded since Nov. 30. Mimecast first went public in November 2015. The transaction includes a 30-day “go-shop” period, allowing Mimecast’s board to terminate the deal with Permira and enter a superior proposal from another suitor should an offer materialize by Jan. 6.

“Mimecast is widely recognized as an established leader and innovator in the email security space with a strong and growing position in the enterprise market,” Permira Principal Pierre Pozzo said in a statement. “We look forward to partnering with the Mimecast team to accelerate the product road map and expand the go-to-market organization to drive further growth.”

The proposed acquisition comes four months after Thoma Bravo purchased top Mimecast competitor Proofpoint for $12.3 billion in the second-largest cybersecurity deal of all time. While Proofpoint and Mimecast have similar technology, their customer bases are different since Proofpoint historically focused on the enterprise while Mimecast sold to SMB and midmarket firms.

All three of the publicly traded email security vendors coming into 2021 have signed acquisition agreements this year. OpenText last month agreed to buy Zix for $860 million to create a powerhouse SMB platform by integrating the company’s email security technology with data protection, threat management, and compliance offerings from Carbonite and Webroot.

“Email is the leading vector for cyberattacks, and phishing and impersonation attempts are continuously evolving,” Permira Partners Michail Zekkos and Ryan Lanpher said in a statement. “This means there has never been more urgency or need for organizations to protect their critical data and infrastructure.”

Permira is a newer player in the cybersecurity market, teaming up last month with fellow private equity firm Advent International and others to purchase pure-play consumer cybersecurity vendor McAfee for $14 billion in the largest cybersecurity acquisition of all time. Outside security, Permira teamed up to buy data integration software developer and services provider Informatica for $5.3 billion in April 2015.

“Permira has a strong track record of supporting companies’ growth ambitions and strategic goals,” Mimecast Chairman and CEO Peter Bauer wrote in a blog post. “They know us and we know them—they have been a customer of ours for some time. I know they share our vision and will be a great partner for Mimecast in our next phase of growth.”

Mimecast has rebounded from a rocky start to 2021 after disclosing in January that Russian foreign intelligence service (SVR) hackers compromised a Mimecast certificate used to authenticate several of the company’s products to Microsoft 365 Exchange Web Services. The SVR got in by exploiting a backdoor in the SolarWinds Orion network monitoring software the company had previously used.

Once inside, the SVR hackers downloaded Mimecast source code repositories and accessed and potentially extracted encrypted customer service account credentials that establish a connection from their Mimecast tenants to on-premises and cloud services. In response to the attack, Mimecast decommissioned its SolarWinds Orion software and replaced it with a Cisco NetFlow monitoring system.

In addition, Mimecast announced in February plans to cut 80 of its roughly 1,800 positions to help the company shift upmarket and provide more resources to larger enterprises while leveraging automation and efficiency for midmarket and SMB customers. Specifically, Bauer said Mimecast plans to expand and strengthen its enterprise team to give those customers a customized, higher-touch experience.

Mimecast conducted 78 percent of its business through the channel in the company’s most recent fiscal year, targeting large enterprises through partners like CDW and Dimension Data and midmarket customers through Softchoice, SHI, CDW and Softcat. Jonathan Corini joined Mimecast from Forescout in 2020 as global channel chief, while Kurt Mills came over from FireMon in 2019 to lead North American partners.