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Thoma Bravo pulls plug on Darktrace takeover

Shares in the UK cyber firm slumped 30%, as investors had pinned hopes on takeover deal

A security alert on a laptop

US private equity firm Thoma Bravo has confirmed it is no longer interested in acquiring British cyber security starlet Darktrace. 

The two companies have been locked in negotiations since 15 August but a statement released by Thoma Bravo on Thursday said that an agreement could not be reached on "the terms of a firm offer".

Under London's takeover rules, Thoma Bravo is not allowed to return with an offer within six months, unless certain conditions are met. The US firm would either need to reach a direct agreement with the Darktrace board or a rival bidder coming to the table would allow the US firm to re-enter negotiations. 

Talks with Thoma Bravo began after the US firm made a number of "unsolicited" proposals to acquire Darktrace, the British company said in a statement. It met with the US firm as it had "fiduciary obligations" to consider any credible proposal that it could recommend to its shareholders.

The announcement coincided with the publication of Darktrace's annual earnings results which are the first the company has posted since going public. Revenue grew 45.7% in the financial year to 30 June, with its customer base increasing to 32.1% year-on-year. 

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Despite the termination of talks with Thoma Bravo, the board is confident in the company and its future prospects, which, it said, had been demonstrated by its financial results. 

The company has been boosted in part by the mass shift to remote working during the pandemic and also the spike in cyber attacks as a result of the ongoing conflict between Russia and Ukraine. That, in turn, has increased demand for security software. 

However, despite the uptake and its strong financial results, investors were reportedly unhappy with the decision to end talks with Thoma Bravo and began selling off Darktrace stock on Thursday. Shares reportedly slumped 30% after the announcement. 

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