Sophos sells majority stake to investors

Venture capitalists Apax Partners pick up a 70-percent share in the security company in a deal worth $580m
Written by Tom Espiner, Contributor

Private equity firm Apax Partners has bought a majority stake in Sophos, a deal that values the UK-based security company at $830m.

Apax will spend approximately $580m (£384m) on a 70 percent stake in Sophos, the security vendor's senior technology consultant Graham Cluley said on Tuesday.

Oxfordshire-based Sophos provides antivirus products exclusively to companies, rather than consumers. Its flagship products are Sophos Endpoint Security and Data Protection, its SafeGuard encryption product, Web Security and Control, and Email Security and Data Protection. The company was founded over 20 years ago.

Cluley said that the company will continue to operate in the same way, with no structural changes as a result of the buyout. "There won't be any job losses or any changes inside Sophos," said Cluley. "There will be the same management team."

Sophos, whose customers include Cisco, Marks and Spencer, Heinz and Harvard University, had planned to make an initial public offering (IPO) in 2007, according to Cluley. However, the arrival of the economic recession made the situation unwelcoming for a market launch, so the shareholders looked at publicly floating Sophos in 2010 instead, he added.

Apax approached Sophos earlier this year and made a more attractive offer than an IPO, according to Cluley.

The majority of the proceeds from the deal, announced on Monday, will go to Sophos co-founders Jan Hruska and Peter Lammer. Minority shareholder TA Associates is also selling its shares to the investors.

Hruska and Lammer will retain most of the 30 percent of shares not sold to Apex, Cluley added.

In its fiscal year that ended on 31 March, Sophos had revenue of $260m, up from $213m the year before, according to the security company. Cash flow was about $55m.

Apax is a private equity firm headquartered in London. It invests primarily in technology and telecommunications companies, as well as in business that provide retail, media, healthcare and financial services.

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