Apax Partners to acquire majority interest in Sophos Plc

Sophos Press Release

IT security and data protection firm Sophos has announced that it has reached a definitive agreement to sell a majority interest in the company to Apax Partners, a global private equity group, in a transaction valuing the company at $830 million (USD). When the transaction is completed, the founders of Sophos will retain a significant minority shareholding. TA Associates, a minority shareholder in Sophos since 2002, will sell its full interest to Apax in this transaction.

Sophos operates in the IT security market, protecting companies of all sizes against computer and data threats. Sophos's flagship endpoint security and data protection product offers anti-virus, anti-spyware, client firewall, host intrusion prevention, network access control, application control, device control, disk encryption and data leak prevention. The company has over 100 million users in more than 150 countries, with customers including Cisco, Marks and Spencer, Heinz and Harvard University. In its fiscal year ended March 31, 2010 (unaudited), Sophos had billings in excess of $330 million (compared with $273 million in FY 2009), revenue in excess of $260 million (FY2009: $213 million) and generated unlevered free cash flow of approximately $55 million (FY2009: $40 million).

"Over the past three years, Sophos has prospered operationally and financially, growing our revenues at a 27% cumulative annual growth rate and generating strong cash flow," said Steve Munford, CEO of Sophos. "As the market continues its migration from point solution to tailored, unified security suites, Sophos's strategy to offer the world's most resilient, cost effective solutions without any additional complexity remains key. Apax's financial backing, combined with Sophos's deep understanding of security and data protection is great news for our customers, prospects, partners. It is also a testament to the efforts of all those who helped bring Sophos to where it is today."

"We are delighted to have the opportunity to back Sophos as well as its excellent CEO and management team," said Salim Nathoo, a partner in the Tech & Telecom team at Apax Partners. "We identified the security software space as an attractive investment area for us given its rapid growth driven by ever increasing malware threats and high barriers to entry. Sophos is a very strong platform and is gaining market share. Apax's strong track record and industry specific knowledge in the technology sector makes Sophos a perfect fit, and we look forward to working closely with this high-growth business going forward."

"We invested in Sophos eight years ago because of its stellar reputation in the security software marketplace," said Ajit Nedungadi, a Managing Director at TA Associates. "We have enjoyed working with the founders and management team of Sophos to further build on that foundation, helping them grow the company six-fold since 2002. Our best wishes to Steve and his team for continued success."

Technology & telecoms is one of the five sectors on which Apax Partners focuses exclusively. Notable current and historic investments in the sector include Promethean World, a leader in the rapidly growing global market for interactive learning technology; SMART Technologies Inc, a Canadian provider of interactive collaboration products; TDC A/S, the pan-European telecoms business headquartered in Denmark; Weather Investments, an international telecommunications business; and Inmarsat and Intelsat, which are both global satellite operators.

Alongside Apax Partners, current shareholders will retain significant stakes in the business, including Dr Jan Hruska and Dr Peter Lammer, who co-founded the company in 1985.

About Apax Partners

Apax Partners is one of the world's leading private equity investment groups. It operates across the United States, Europe and Asia and has more than 30 years of investing experience. Funds under the advice and management of Apax Partners globally total approximately $40 billion.

These Funds provide long-term equity financing to build and strengthen world-class companies. Apax Partners Funds invest in companies across its global sectors of Retail & Consumer, Tech & Telecom, Media, Healthcare and Financial & Business Services. For more information, visit: www.apax.com.

About TA Associates

Founded in 1968, TA Associates is one of the largest and most experienced middle market private equity firms. The firm has invested in nearly 400 companies and manages more than $16 billion in capital. With offices in Boston, London, Menlo Park and Mumbai, TA Associates leads buyouts and minority recapitalizations of profitable growth companies in the technology, financial services, business services, healthcare and consumer industries. More information about TA Associates can be found at www.ta.com.

More than 100 million users in 150 countries rely on Sophos’ complete security solutions as the best protection against complex threats and data loss. Simple to deploy, manage, and use, Sophos’ award-winning encryption, endpoint security, web, email, mobile and network security solutions are backed by SophosLabs - a global network of threat intelligence centers. Sophos is headquartered in Oxford, U.K., and is publicly traded on the London Stock Exchange under the symbol “SOPH.” More information is available at www.sophos.com/company.