Cybersecurity firm Rapid7 fields buyout interest, sources say

Rapid7

28/10/2024 19:36

* 
      Rapid7 in early talks with Advent, Bain, EQT for potential
sale
    

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      Activist investor Jana Partners pressures Rapid7 to
explore sale
    

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

  
    By Milana Vinn
       NEW YORK, Oct 28 (Reuters) - Rapid7  RPD.O , a
cybersecurity firm with a market value of $2.4 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 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.
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.
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.
The company's shares are down about 32% this year,
underperforming the S&P 500 systems software index  .SPLRCSYSF ,
which has risen more than 17%. 
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.
Last year, Rapid7 hired Peiter Zatko, a former hacker who served
as head of security at social-media platform X until his firing
in January 2022, as a part-time consultant. X owner Elon Musk
seized on Zatko's claims about X's security flaws and lack of
control over spambots in his unsuccessful bid to pull out of his
$44-billion acquisition of the platform in 2022.

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