Proofpoint is in talks to acquire cybersecurity firm Varonis Systems. With a market value of approximately $5.4 billion, this would be one of the larger software deals of the year. However, an agreement has not yet been reached.
Bloomberg reports this based on sources familiar with the negotiations. Varonis is said to have retained advisors to assess interest from potential buyers. Proofpoint, which has been owned by investor Thoma Bravo since 2021, is currently negotiating the terms of a potential acquisition. The Wall Street Journal also reports that the talks are at an advanced stage.
If the negotiations are successful, Bloomberg reports that a deal could be announced within a few weeks. At the same time, the talks could still fall through, and there is a possibility that another party could emerge as a buyer. Proofpoint, Varonis, and Thoma Bravo have not yet responded to the reports.
The news immediately caused a stir on the stock market. Varonis closed 10 percent higher on Wednesday at $46.76. This brought the company’s market value to approximately $5.4 billion.
From competitor to Proofpoint subsidiary
A takeover would bring together two companies that compete directly in parts of the cybersecurity market. Proofpoint is best known for security solutions related to email, users, and data, while Varonis focuses heavily on identifying and classifying corporate data and monitoring access to that information. Its platform covers cloud, SaaS, and hybrid environments, among others.
The fact that the two companies are competitors is also evident from the way Proofpoint currently positions Varonis. On its own website, Proofpoint features a specific comparison between its Data Security Posture Management offering and that of Varonis. In it, Proofpoint explicitly contrasts its own technology with that of its potential acquisition target.
For Proofpoint, Varonis would primarily add significant strength in the area of data protection. This area is becoming increasingly important as corporate data becomes more widely distributed across cloud environments, SaaS applications, and AI systems.
Thoma Bravo previously paid 12.3 billion
Thoma Bravo itself took Proofpoint private in 2021 for approximately 12.3 billion dollars. The investment firm has continued to build out the company since then. Proofpoint also completed the acquisition of Hornetsecurity for 1.8 billion dollars late last year.
A potential acquisition of Varonis would also stand out in a relatively quiet market for major software acquisitions. The rapid rise of generative AI has created uncertainty about the future value of existing software companies. This has not only affected stock prices but has also made financiers more cautious about large transactions.