British cybersecurity firm Sophos plans to acquire competitor Secureworks from current owner Dell for 859 million dollars, or more than 792 million euros. This means Sophos gains access to Secureworks’ Taegis threat detection & response platform, the most important part of its offering.
As part of the deal, Sophos will pay a 28 percent premium on the current value of Secureworks’ shares. If competition authorities approve the acquisition, it is expected to close next year. The proposed sale would further consolidate the cybersecurity business.
The Taegis XDR platform is Secureworks’ flagship product. This threat detection platform targets medium and large enterprises. As such, the acquisition should enhance Sophos’ current Managed Detection and Response (MDR) capabilities. Sophos CEO Joe Levy stated that by merging the two companies’ products, Sophos’ market position will be strengthened. He also promised improved services for customers of all sizes.
Value went down significantly
Last summer, Secureworks had a market value of 800 million dollars, about 722 million euros. Back in 2019, Dell was already considering selling SecureWorks. At the time, the company saw this as an opportunity to reduce its own debts, which amounted to about 50 billion dollars at the time. Secureworks is partially publicly traded, although its stock has fallen more than 66 percent in value since September 2021. The company is said to be struggling to differentiate itself from major players in the market. With Secureworks delisting, current investors will get 8.50 dollars per share.
Sophos is the property of private equity firm Thoma Bravo, which has been on an acquisition spree in the cybersecurity sector lately. It has made numerous acquisitions, including Darktrace for 5.3 billion dollars, Imperva (3.6 billion dollars), SailPoint (6.9 billion dollars), and Proofpoint for a whopping 12.3 billion dollars. By comparison, this latest acquisition is small potatoes.
Billions of cybersecurity in portfolio
Thoma Bravo now has some 50 billion dollars of cybersecurity business in its portfolio and is an important factor in the industry’s ongoing consolidation. We did see more acquisitions recently that indicate cybersecurity companies have fallen on hard times.
Organizations are moving more frequently toward larger platforms, the momentum that security parties built during the COVID-19 pandemic is waning, and funding is becoming more difficult. The implications are profound, at least for some security players. Indeed, not all acquisitions involve billion-dollar deals; sometimes, companies trade hands for a fraction of their former value.