Cybersecurity firm Rapid7 fields buyout interest, sources say

Rapid7

28/10/2024 23:26

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      Rapid7 is working with advisers on talks with potential
buyers 
    

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      Talks are at an early stage, deal not guaranteed
    

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      Rapid7 shares down 32% this year, underperforming S&P 500
systems software index
    

  
 (Adds share move in paragraph 5)
    By Milana Vinn
       NEW YORK, Oct 28 (Reuters) - Rapid7  RPD.O , a
cybersecurity firm with a market value of about $2.5 billion, is
exploring options with its investment bankers after attracting
acquisition interest from buyout firms, according to people
familiar with the matter. 
    The Boston-based company, which is being advised by Goldman
Sachs  GS.N  and JPMorgan  JPM.N , is in early-stage talks with
private equity firms including Advent, Bain Capital and EQT, and
is exploring a potential sale, the sources said, requesting
anonymity as the discussions are confidential. 
    The discussions may not lead to a deal and Rapid7 could opt
to stay independent, the sources added.
    Rapid7's shares jumped more than 9% on Monday on the news,
before paring some gains to close up over 4%. 
    This is not the first time Rapid7 has attracted acquisition
interest. Last year, the company explored its options after
fielding interest from potential suitors, Reuters reported,
before the talks fizzled out. 
    Rapid7, Advent, Bain, EQT and JPMorgan declined to comment.
Goldman Sachs did not immediately respond to Reuters requests
for comment.
    The discussions come at a time when Rapid7 faces pressure
from activist investor Jana Partners, which has built a 5.8%
stake in the company and urged it to explore a sale. 
    Rapid7 specializes in so-called vulnerability management,
providing software tools and services that help businesses
assess and monitor security risks. It has been forced to compete
harder for business as corporate clients have cut back on
security spending due to broader macroeconomic uncertainty. 
    The company's shares were down about 32% this year before
Friday's close, underperforming the S&P 500 systems software
index  .SPLRCSYSF , which has risen more than 17% during the
same period. 
    Rapid7 competes in the vulnerability management market
against larger rivals such as Tenable  TENB.O , which has also
been exploring a sale, and Qualys  QLYS.O . 
    Private-equity firms have been prolific investors in the
cybersecurity sector in recent years. In November 2021, an
investor consortium led by Advent International acquired McAfee
Corp for $14 billion. In 2022, Vista Equity took cybersecurity
firm KnowBe4 private in a deal worth $4.6 billion.

 (Reporting by Milana Vinn in New York; Editing by Anirban Sen,
Rod Nickel and Leslie Adler)
 ((mailto:Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno;
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