Sophos: US scoops up another UK success story

published 17 October 2019

British cybersecurity company Sophos is a "homegrown success story" with "good prospects", says the Financial Times. So it's not surprising that the American private-equity firm Thoma Bravo has offered £3.1bn for it. Those who bought the stock when it floated in 2015 have more than doubled their stake.

While there will be the inevitable "hand wringing" at the idea of a British tech firm being taken over by a foreign company, fears of losing local tech expertise are "overdone": Thoma Bravo intends to keep Sophos as a standalone business.

It's easy to see why Thoma Bravo is interested in Sophos, says Liam Proud for Breaking- views. Its network of 45,000 sales partners, such as regional computer shops and consultants, which sell its products to businesses, means that the new owner "can buy up other products and turbocharge sales by pushing them out to Sophos's distributors". Still, the American fund is having to pay a "punchy" 37% premium, implying that the company is valued at "almost six times last year's revenue".

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Thoma Bravo is the latest US firm attracted to the UK by the low value of the pound and restrained stockmarket valuations, says Simon Duke in The Times. However, Sophos's shareholders should be "wary" of hanging on "in the hope of a counterbid". This deal is backed by Sophos's founders and Apax Partners, its biggest shareholder, and Thoma Bravo already owns Sophos's biggest competitor, Barracuda. It's "hard to see other funds wanting to lock horns with this powerful suitor".

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Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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