Mimecast received a lucrative takeover proposal from Proofpoint weeks after Permira made its $5.8 billion acquisition offer but rejected the Proofpoint bid over antitrust concerns.
Sunnyvale, Calif.-based Proofpoint offered on Dec. 31 to buy Lexington, Mass.-based email security competitor Mimecast for $92.50 per share, or roughly $6.7 billion, Bloomberg reported Thursday. That deal would have been worth 15.5 percent more than the $80 per share, or $5.8 billion, transaction Mimecast agreed to with private equity powerhouse Permira on Dec. 7.
The Mimecast-Permira deal included a 30-day “go-shop” period lasting until Jan. 6 during which time Mimecast’s board could have terminated the agreement with Permira and taken a superior proposal from another suitor. But Mimecast rejected Proofpoint’s offer and the company’s request to conduct due diligence because it viewed the bid as carrying too much antitrust risk, according to Bloomberg.
After considering all the alternatives available to Mimecast, the Board of Directors determined that the Permira transaction is in the best interests of shareholders and the Company,” Mimecast said in a statement provided to CRN. “It maximizes value, delivering a significant cash premium with a clear path to close. We look forward to completing the transaction with Permira in the coming months.”
Proofpoint declined to comment on the report while Permira and Thoma Bravo – which has owned Proofpoint since August 2021 – did not immediately responded to CRN requests for comment. Mimecast’s stock is up $1.07 (1.36 percent) to $80.26 per share in trading Thursday morning, which is the highest the company’s stock has traded since Nov. 30, a week before Mimecast accepted Permira’s takeover offer of $80 per share.
An independent Special Committee of Mimecast’s Board of Directors worried that attempting to join forces with Proofpoint would prompt a drawn-out review process with a good chance of failure, people familiar with the matter told Bloomberg. Proofpoint and Mimecast are the two largest independent email security vendors in the world and are considerably bigger than any pureplay rivals in the space.
Mimecast met with Proofpoint several times in recent weeks, but Proofpoint was unable to assuage Mimecast’s antitrust fears, according to Bloomberg. Proofpoint had indicated it could increase its proposed purchase price for Mimecast following due diligence.
It’s unclear whether Proofpoint will keep pursuing Mimecast, according to Bloomberg. The Wall Street Journal first reported in October that Proofpoint was expected to emerge as a potential bidder for Mimecast after Mimecast brought in bankers to explore a possible sale.
The revelation of Proofpoint’s recent interest could make it harder for Mimecast to secure shareholder approval for the Permira deal, Bloomberg reported. Institutional investor BlackRock owns 7 percent of Mimecast’s outstanding shares; co-founder, Chairman and CEO Peter Bauer owns 5.5 percent of outstanding shares; and co-founder and ex-CTO Neil Murray owns 1.3 percent of outstanding shares.
While Proofpoint and Mimecast have similar technology, their customer bases are different since Proofpoint historically focused on the enterprise market while Mimecast sold to SMB and mid-market firms. The third largest pure-play email security vendor had been Zix, which was acquired last month by OpenText for $860 million to form a robust SMB platform via integrations with its Carbonite and Webroot acquisitions.
Proofpoint’s bid for Mimecast came four months after Thoma Bravo purchased Proofpoint for $12.3 billion in the second-largest cybersecurity deal of all time. Proofpoint made its first acquisition Monday since being bought by Thoma Bravo, purchasing Singapore-based Dathena to help organizations better understand information risk and eliminate data loss through AI-based data classification.
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