Tim Mueller’s Transaction Analysis: New IT M&A Deals Nov. 28

Thoma Bravo to Acquire Barracuda Networks for $1.6B

Financial Information*

  • Enterprise Value ~$1.6B
  • EV/LTM Revenue 3.7x
  • EV/LTM EBITDA 42.0x

Transaction Facts

  • Barracuda Networks (NYSE:CUDA) today announced that it has entered into an agreement to be acquired by private equity firm Thoma Bravo in an all-cash transaction valued at $1.6B. The deal is expected to close by the end of February.
  • Barracuda shareholders will receive $27.55 per share in cash, which represents a premium of 16.3 percent to Barracuda’s Friday close and a 22.5 percent premium over the company’s 10-day average stock price.
  • Shares of Barracuda rose 16 percent today in light of the announcement.

From Public Eye to Private Equity

  • In-Demand Services: Founded in 2003, Barracuda raised at least $46M in funding before it went public 10 years later in 2013. Providing appliance, virtual appliance, cloud and hybrid deployment configurations to ~150,000 clients, the company has focused on delivering subscription-based security and data protection solutions.
  • Harder Playing Field: As the demand for cloud has risen, competition has simultaneously increased. Barracuda is competing with the likes of Palo Alto Networks and Symantec, both of which have notable scale and specialization. Symantec, in particular, has developed a strong taste for M&A, acquiring Blue Coat Systems for $4.65B and LifeLock for $2.3B in 2016. Meanwhile, Barracuda has not been able to replicate the highs of 2015 — where shares hit their peak at $45.88 — in recent quarters. However, Barracuda’s cybersecurity portfolio made the company an attractive acquisition target for Thoma Bravo. Ultimately, going private may give Barracuda the resources it needs to grow, and the PE exit strategy has become more common as of late.
  • Behind the Scenes: Thoma Bravo, which manages private equity and debt funds representing more than $17B of capital commitments, has become more aggressive and expansive in its pursuit of software companies. In August 2016, the private equity firm completed the acquisition of visual analytics company Qlik. A year prior, in November 2015, the company sold solution provider Sirius Computer Solutions to Kelso & Co. Earlier that year in April, Thoma Bravo acquired application performance infrastructure company Riverbed, and sold Blue Coat Systems a month later (Thoma Bravo had previously acquired the firm in February 2012).

For more information about this transaction, click here to read the press release.

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