Times article on Dark - good summary28 Apr 2024 03:29
Darktrace departure casts a shadow over the City
(The Times)
A previous bid may have been described as a “distraction” by its chief executive, but there was no dismissing the significance yesterday of Darktrace’s decision to agree a £4.3 billion takeover deal with an American private equity suitor and to walk away from the London stock market.
After a turbulent life as a listed entity, the British cybersecurity company has accepted a cash offer from Thoma Bravo, the private equity firm that had abandoned a previous tilt at the Cambridge-based business.
As a result, Darktrace will quit the glare of public markets that had become increasingly fierce as the company was beset by multiple short-seller attacks and by questions over its links to Mike Lynch, the technology entrepreneur who was extradited to the United States.
Lynch, 58, is on trial over charges relating to the sale of Autonomy, another company he founded, to Hewlett-Packard for $11.1 billion in 2011. The American buyer wrote down the value of its acquisition a year after the purchase and alleged that the British business had engaged in “serious accounting improprieties”. Lynch has denied all charges.
Lynch was a founding investor in Darktrace and, while he has no formal role within the company, remains a significant shareholder alongside his wife, Angela Bacares. Poppy Gustafsson, 41, Darktrace’s chief executive, has been regarded as his protégé after working in Autonomy’s finance department between 2009 and 2011. She is due to give evidence at Lynch’s trial.
Darktrace uses artificial intelligence and machine learning to detect vulnerabilities in its clients’ computer systems and to provide protection against cyberattacks. Its AI systems seek to identify when digital activity diverges from normal patterns.
The business was floated in April 2021 at 250p a share, giving it a valuation of £1.7 billion. The shares rose to about 945p during the year of its market debut, but came under pressure as short-sellers made allegations about the state of its finances.
Andrew Ripper, an analyst at Liberum, the broker, said Lynch’s legacy had been an issue for Darktrace. “There are quite a few people within the company who are ex-Autonomy,” he said. “Lynch and people associated with him had a holding in the business and that has been a factor in the share price volatility and investability for institutional investors who are concerned about governance and history.
“The board has done the right thing to make the company more investable over time, such as more independent non-executive directors.”
One City source said: “In the case of Darktrace, the main discount was the legacy of Mike Lynch. Obviously it’s not good news for the UK stock market because they were starting to cleanse themselves. All that hard work will go to Thoma Bravo or someone else.”
Thoma Bravo, a specialist technology investor, made its first approach for Darktrace in 2022, but walke
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