Proofpoint agrees to buy Varonis in a $6.3 billion cash deal

What happened

Varonis Systems agreed on Thursday 15 October to be bought by Proofpoint, a cybersecurity company owned by funds of Thoma Bravo, in an all-cash deal the companies valued at about $6.3 billion. ^{[1, 2]}

Varonis's board approved the agreement unanimously and will ask shareholders to adopt it. Reuters reported that the offer values Varonis's equity at $5.71 billion, a narrower measure than the deal value the companies gave. ^{[1, 5]}

Why it matters

A listed Miami data security company would leave the Nasdaq and become private. Varonis reported revenue of $180.0 million for the quarter to June 30, against $152.2 million a year earlier, and a net loss of $46.8 million. ^{[1, 4]}

Proofpoint chief executive Sumit Dhawan said 'AI agents are increasingly accessing sensitive information and taking action across systems.' ^[2]

The terms

Closing needs a majority of Varonis's shares, the end of the US antitrust waiting period and clearance under certain foreign laws. Proofpoint's obligation carries no financing condition, the filing says. ^[1]

Thoma Bravo funds committed the equity and banks committed debt. The companies said Ontario Teachers' Pension Plan also agreed to invest in Proofpoint in connection with the deal. ^{[1, 2, 6]}

Varonis would owe Proofpoint a $211.7 million fee if, for example, it left for a better offer. Proofpoint would owe Varonis $423.3 million in specified cases, such as failing to close once the conditions are met. The agreement has no go-shop period: a no-shop clause bars Varonis from seeking other bids. ^{[1, 3]}

How Varonis got here

Varonis completed its move to SaaS, software sold as a subscription service, and set the end of its self-hosted business for the end of 2026. SaaS made up 95.4 percent of second-quarter revenue, against 69.6 percent a year earlier, the quarterly report shows. ^[4]

Its annualized SaaS contract value was $726.0 million at June 30, up 52 percent from $478.3 million, the company reported. Chief executive Yaki Faitelson said a board committee ran the sale with 'extensive outreach to a range of potential strategic and financial buyers.' ^{[4, 2]}

Bloomberg first reported in June that private equity firms had shown interest, SiliconANGLE wrote. Reuters had reported in September that Proofpoint was in talks. Varonis employs about 2,800 people, about 1,000 of them in Israel, Calcalist reported. ^{[6, 5, 7]}

What settles it next

Varonis said it will publish third-quarter results after the market close on Tuesday 3 November, with no conference call. The companies said they expect to close in the first half of 2027. ^{[2, 5]}

Either side may end the agreement if the deal has not closed by Thursday 15 July 2027, a date that can extend three months for regulatory approvals. ^{[1, 3]}

Who it reaches

Varonis Systems (VRNS) is direct: it signed the agreement and would become a wholly owned subsidiary of Proofpoint. Faitelson, who owns about 0.67 percent of the shares, agreed to vote them for the deal. ^[1]