Key Takeaways
- • Thoma Bravo acquires Magnet Forensics for CA$1.8 billion (approximately $1.3 billion USD) in an all-cash transaction, with public shareholders receiving CA$44.25 per Subordinate Voting Share, representing a 15% premium to the January 19, 2023 closing price and a 41% premium to the 90-day volume-weighted average price.
- • Rolling shareholders—including founders Jad Saliba and Adam Belsher, and Jim Balsillie—receive a lower cash price of CA$39.00 per share but will retain equity stakes in the combined entity, signaling management confidence in the acquisition's strategic rationale.
- • Magnet Forensics will be combined with Grayshift, which Thoma Bravo acquired majority control of in July 2022, creating an integrated digital forensics platform serving over 4,000 enterprises and public safety organizations globally.
- • The transaction values the company at approximately CA$1.8 billion on a fully-diluted, in-the-money, treasury method basis and is subject to shareholder approval and customary closing conditions; Magnet will become a privately held company upon completion.
- • Thoma Bravo continues expanding its cybersecurity and digital investigation software portfolio through strategic acquisitions, positioning itself as a consolidator in the forensics and investigative software market.
Summary
Magnet Forensics Inc., a Toronto-listed developer of digital investigation solutions, has entered into a definitive arrangement agreement to be acquired by Thoma Bravo, a leading software investment firm, in a transaction valued at approximately CA$1.8 billion. Under the terms of the agreement announced on January 20, 2023, public shareholders holding Subordinate Voting Shares will receive CA$44.25 per share in cash, while founder-affiliated "Rolling Shareholders"—including co-founders Jad Saliba and Adam Belsher, as well as Jim Balsillie and their respective associates and affiliates—will receive CA$39.00 per share for their holdings that are sold for cash to Thoma Bravo's acquisition vehicle, Morpheus Purchaser Inc. The Rolling Shareholders will retain equity positions in the combined entity post-closing.
The purchase price of CA$44.25 represents a 15% premium to Magnet's closing stock price on the Toronto Stock Exchange on January 19, 2023, and a substantially higher 41% premium to the 90-trading day volume-weighted average price as of that date. The aggregate equity value of approximately CA$1.8 billion (or $1.3 billion USD equivalent) reflects a fully-diluted, in-the-money, treasury method valuation and includes rollover equity from the Rolling Shareholders.
Thoma Bravo intends to combine Magnet Forensics with Grayshift LLC, a digital forensics platform in which Thoma Bravo acquired majority control in July 2022. This consolidation strategy creates an integrated end-to-end digital forensics and investigation platform designed to serve Magnet's current customer base of more than 4,000 enterprises and public safety organizations. Following completion of the transaction and the intended combination, Magnet Forensics will operate as a privately held company within Thoma Bravo's portfolio.
The transaction is subject to customary closing conditions, including shareholder approval and regulatory clearances. Kirkland & Ellis advised Thoma Bravo on the acquisition, underscoring the deal's complexity and scale. The transaction reflects continued strategic consolidation within the cybersecurity and digital forensics software sector, as Thoma Bravo leverages its platform approach to combine complementary solutions and expand market reach in the high-growth investigation and compliance technology space.
The purchase price of CA$44.25 represents a 15% premium to Magnet's closing stock price on the Toronto Stock Exchange on January 19, 2023, and a substantially higher 41% premium to the 90-trading day volume-weighted average price as of that date. The aggregate equity value of approximately CA$1.8 billion (or $1.3 billion USD equivalent) reflects a fully-diluted, in-the-money, treasury method valuation and includes rollover equity from the Rolling Shareholders.
Thoma Bravo intends to combine Magnet Forensics with Grayshift LLC, a digital forensics platform in which Thoma Bravo acquired majority control in July 2022. This consolidation strategy creates an integrated end-to-end digital forensics and investigation platform designed to serve Magnet's current customer base of more than 4,000 enterprises and public safety organizations. Following completion of the transaction and the intended combination, Magnet Forensics will operate as a privately held company within Thoma Bravo's portfolio.
The transaction is subject to customary closing conditions, including shareholder approval and regulatory clearances. Kirkland & Ellis advised Thoma Bravo on the acquisition, underscoring the deal's complexity and scale. The transaction reflects continued strategic consolidation within the cybersecurity and digital forensics software sector, as Thoma Bravo leverages its platform approach to combine complementary solutions and expand market reach in the high-growth investigation and compliance technology space.
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