Tufin to Be Bought by PE Firm Turn/River Capital for $570MGoing Private May Help Accelerate Tufin's Pivot to Subscription-Based Revenue
Tufin has agreed to be purchased by private equity firm Turn/River Capital for $570 million just three years after the network security vendor went public.
The Boston-based company said the proposed acquisition will allow Tufin to accelerate its mission of helping enterprise customers use policy-driven automation to address the security threats of tomorrow (see: Effectively Addressing Policy Change Management). The $13-per-share deal is expected to close in the second quarter of 2022, and represents a 44% premium over Tufin's closing share price Tuesday of $9.03 per share.
"We believe Turn/River Capital is the ideal partner for Tufin as the company makes further progress to a subscription-based revenue model," Tom Schodorf, lead independent director of Tufin's board of directors, said in a statement. "We are confident that this transaction with Turn/River will allow Tufin to accelerate this transition expand to new markets, and reach new customer segments."
Tufin's stock is up $3.91, or 43.3%, to $12.94 per share in premarket trading Wednesday. That's the highest Tufin's stock has traded since Feb. 12, 2021. The company went public in April 2019, raising $108 million in a New York Stock Exchange public offering that valued Tufin at $453.6 million. Tufin is one of the smallest publicly traded security firms by valuation, ahead of only IronNet and Cyren.
The transaction includes a 30-day "go-shop" period, allowing Tufin's board to terminate the proposed acquisition by Turn/River Capital and enter into a superior proposal from another suitor should an offer materialize by May 5. Tufin declined to comment further, while Turn/River Capital didn't immediately respond to a request for comment from Information Security Media Group.
"As a private company, we will have the opportunity to accelerate our growth through investments in our technology, people and go-to-market," Ruvi Kitov, Tufin co-founder, chairman and CEO, said in a statement. "The team at Turn/River specializes in helping software companies like Tufin, and with their partnership and expertise I am confident that we will be able to achieve our long-term goals faster."
Turn/River Capital has a limited presence in the cybersecurity market, investing in Austin, Texas-based application security testing vendor Invicti in 2017 and leading a $40 million Series A funding round for enterprise web application security vendor Netsparker in April 2018. Netsparker joined forces with SMB-focused Acunetix to form Invicti, which in October 2021 received $625 million from Summit Partners.
In February 2020, Turn/River Capital invested an undisclosed amount in Romanian-based data loss prevention vendor Endpoint Protection by CoSoSys. Tufin is the first publicly traded cybersecurity vendor Turn/River Capital has acquired.
"Tufin is an industry leader in network security policy management, helping enterprise customers secure their most critical network infrastructure and cloud assets," Dominic Ang, Turn/River Capital managing partner, said in a statement. "We are incredibly excited to bring our best-in-class operations team, with their deep expertise in marketing, sales and customer success, to our partnership with Tufin."
Tufin was founded in 2005 by Check Point veterans Kitov, now 48, and Reuven Harrison. now 52, Harrison currently serves as Tufin's CTO. Kitov owns 5.2% of Tufin's outstanding stock, while Harrison owns 4.6% of outstanding stock, and both have pledged to vote their shares in favor of the Turn/River Capital acquisition. The top institutional investors in Tufin are ETF Managers Group and EVR Research.
The company's revenue jumped in 2021 to $110.9 million, up 10% from $100.8 million the year prior. Tufin's net loss increased to $36.9 million, or $0.99 per share, slightly worse than a net loss of $35.4 million, or $0.99 per share, the company recorded in 2020.
Other Recent Activity
A number of publicly traded cybersecurity vendors have gotten scooped up by either financial or strategic buyers in recent months. On the private equity side, Advent and Permira closed their $14 billion acquisition of McAfee in March, Permira agreed in December to buy email security firm Mimecast for $5.8 billion, and Thoma Bravo purchased email security vendor Proofpoint for $12.3 billion in August.
As for technology buyers, public cloud and search giant Google agreed in March to purchase threat intelligence and incident response vendor Mandiant for $5.4 billion, and information management vendor OpenText acquired email security vendor Zix in December for $860 million.