Device security firm Forescout snapped up by Advent in $1.9 billion deal

The agreement represents a premium of roughly 30 percent on closing share prices.

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Forescout Technologies has been acquired by global private equity investor Advent International in a deal worth $1.9 billion. 

The all-cash transaction, announced this week, will allow Advent to purchase all outstanding shares of Forescout common stock for $33 per share, which represents a premium of approximately 30 percent over Forescout closing prices of $25.45 on October 18, 2019.

This was the last day of trading before investors Corvex Management L.P. and Jericho Capital Asset Management L.P. filed and acknowledged the formation of a partnership to accumulate 14.5 percent of the company and plans to approach Forescout over a potential acquisition surfaced. 

See also: HPE acquires zero-trust networking, security firm Scytale

Advent will be joined by another private equity firm, Crosspoint Capital Partner, as a co-investor and advisory body. 

Forescout is an enterprise security company that offers clients solutions focused on device and network visibility. On February 6, the company announced full-year 2019 revenue of $336.8 million, non-GAAP operating losses of $37.8 million, and free cash flow negative $30.3 million, in comparison to being $5.9 million in the black during FY 2018.

The deal is subject to regulatory and Forescout shareholder approval and is expected to close in Q2 2020. However, a 30-day "go-shop" period is also in place which allows Forescout to solicit other acquisition proposals. 

Forescout will remain in San Jose, California, and the current president and CEO Michael DeCesare will stay at the helm. However, the cybersecurity firm will be going private. 

"Upon completion of the transaction, Forescout will become a private company with the flexibility to continue investing in the development and deployment of leading-edge cybersecurity products and solutions that serve the evolving needs of enterprise customers," the companies said

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As a result, common stock will be removed from public markets after the acquisition closes. Theresia Gouw, Chair of the Forescout Board said that board members have recognized the "likely volatility" of upcoming business changes and so going private via this deal "is the best path forward for Forescout and our stakeholders."

"Forescout has established itself as a leader in device visibility and control, with the most advanced platform in the market," said DeCesare. "We are still in early innings of a large market opportunity as every organization needs visibility into what is connecting to their network and how to mitigate against high-risk devices, including non-traditional IoT and OT devices. This transaction represents an exciting new phase in the evolution of Forescout."

Earlier this week, HPE announced the acquisition of Scytale, a startup made up of experienced engineers from tech giants. Based in San Francisco, the company specializes in zero-trust networking and cloud-native security solutions. Financial details were not disclosed. 

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In recent weeks, a number of startups and established cybersecurity firms have announced acquisition deals. These include the purchase of Armis Security for $1.1 billion by Insight Partners; Rockwell Automation's deal to buy Avnet Data Security, Mimecast's Segasec purchase, and the offload of Broadcom's Symantec cybersecurity business to Accenture.

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