Mimecast rejects higher takeover offer from Proofpoint over antitrust concerns

By Krystal Hu

(Reuters) – Mimecast Ltd, the email security services provider that announced its intention to exit the market last month, has rejected a higher offer from Thoma Bravo-backed Proofpoint due to antitrust risks, according to regulatory filings and sources familiar with the matter.

Proofpoint offered $92.50 in cash per share on Dec. 31, weeks after private equity firm Permira inked a $5.8 billion deal to buy Mimecast, with a 30-day trial period during which Mimecast can talk to other parties, said the people, who asked not to be identified to discuss private matters.

Although the offer is 16% higher than Permira’s $80-a-share offer, Mimecast has rejected Proofpoint’s request to conduct due diligence, citing the antitrust risks associated with a merger between two large email security vendors, the people said.

Mimecast’s special committee reviewed the deal with legal advisers and concluded that combining the two competitors could control more than 50% of the email security market. They believed such a deal would likely lead to a lengthy review by antitrust regulators, with few remedies available, such as divestitures, the people said.

After some discussions, Mimecraft felt that Proofpoint had not adequately addressed its concerns and informed them that it could increase its offer further after conducting due diligence.

“After considering all alternatives available to Mimecast, the Board of Directors has determined that a transaction with Permira is in the best interests of shareholders and the Company,” a Mimecast spokesperson said in a statement.

“Maximizes value by delivering a significant cash bonus with a clear path to close.”

Proofpoint declined to comment. Thoma Bravo, the private equity firm that took Proofpoint private in a $12.3 billion deal last April, did not respond to a request for comment.

The Permira transaction is expected to close in the first half of 2022, subject to shareholder approval.

Mimecast shares rose 1.43% to $80.32.

(Reporting by Krystal Hu in New York; Editing by Richard Chang)