RECOMMENDED CASH ACQUISITION

of

Darktrace plc

by

Luke Bidco Limited

(a newly-formed company indirectly wholly-owned by funds managed and/or advised by Thoma Bravo, L.P.)

to be implemented by means of a scheme of arrangement

under Part 26 of the Companies Act 2006

Summary

·  The boards of directors of Luke Bidco Limited (“Bidco“) and Darktrace plc (“Darktrace“) are pleased to announce that they have reached agreement on the terms and conditions of a recommended all cash acquisition by Bidco of the entire issued, and to be issued, ordinary share capital of Darktrace. It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the 2006 Act.

·  Under the terms of the Acquisition, each Darktrace Shareholder will be entitled to receive:

for each Darktrace Share: $7.75 in cash

·  The GBP equivalent value of the Acquisition price per Darktrace Share based on the Announcement Exchange Rate, being 620 pence, represents a premium of approximately:

o  44.3 per cent. to the volume-weighted average price of 429.9 pence per Darktrace Share for the three-month period ended 25 April 2024 (being the last Business Day before the date of this announcement);

o  20.0 per cent. to the Closing Price of 517.0 pence per Darktrace Share on 25 April 2024 (being the last Business Day before the date of this announcement);

o  19.6 per cent. to the highest closing share price of 518.6 pence per Darktrace Share for the twelve month period ended 25 April 2024 (being the last Business Day before the date of this announcement);

o  46.0 per cent. to the 21 March 2024 secondary placing price of 425.0 pence per Darktrace Share; and

o  148.1 per cent. to the IPO price of 250 pence per Darktrace Share on 30 April 2021.

·  The Acquisition values Darktrace’s entire issued, and to be issued, ordinary share capital at approximately $5,315 million on a fully diluted basis and implies an enterprise value of approximately $4,992 million (which is equivalent to £4,254 million and £3,995 million respectively based on the Announcement Exchange Rate) and a multiple of approximately 34 times Darktrace’s Adjusted EBITDA for the twelve months ended 31 December 2023 of $146 million.

·  Bidco will procure that a facility will be made available under which Scheme Shareholders will be able to elect (subject to the terms and conditions of the facility) to receive the cash consideration in Sterling (after deduction of any transaction or dealing costs associated with the conversion) at the applicable market exchange rate on the latest practicable date for fixing such rate prior to the relevant payment date. Further details of this facility and the election by Scheme Shareholders wishing to receive their cash consideration in Sterling will be set out in the Scheme Document and the Form of Election. On the basis of the Announcement Exchange Rate, the cash consideration implies an equivalent value of 620 pence per Darktrace Share. For any Scheme Shareholder electing to be paid their cash consideration in Sterling, the amount per Darktrace Share received may, depending on the prevailing exchange rate, result in a payment below or above 620 pence per Darktrace Share.

·  If, on or after the date of this announcement and prior to the Acquisition becoming Effective, any dividend and/or other distribution and/or other return of capital or value is announced, declared, made or paid or becomes payable in respect of the Darktrace Shares, Bidco reserves the right to reduce the consideration payable under the terms of the Acquisition for the Darktrace Shares by an amount up to the aggregate amount of such dividend and/or distribution and/or other return of capital or value, in which case any reference in this announcement to the consideration payable under the terms of the Acquisition will be deemed to be a reference to the consideration as so reduced. Any exercise by Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme or the Acquisition. In such circumstances, Darktrace Shareholders would be entitled to retain any such dividend, distribution and/or other return of capital or value.

·  Thoma Bravo, L.P. (“Thoma Bravo“) firmly believes that the Acquisition will benefit Darktrace, Darktrace’s customers and the wider technology ecosystem through supporting the development of enhanced products and Darktrace’s cybersecurity capability. Bidco has agreed with Darktrace under the terms of the Cooperation Agreement that Thoma Bravo will, with Darktrace’s support and involvement, engage proactively and collaboratively with the competent regulatory authorities and government stakeholders, recognising the specific importance of Darktrace’s contribution to the technology ecosystem.

Recommendation

·  The Darktrace Directors, who have been so advised by Jefferies and Qatalyst Partners as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing their advice, Jefferies and Qatalyst Partners have taken into account the commercial assessments of the Darktrace Directors. Jefferies and Qatalyst Partners are providing independent financial advice to the Darktrace Directors for the purposes of Rule 3 of the Takeover Code.

·  Accordingly, the Darktrace Directors intend to recommend unanimously that the Darktrace Shareholders vote, or procure voting, in favour of the Scheme at the Court Meeting and the Resolutions at the General Meeting (or in the event that the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer), as the Darktrace Directors who hold interests in Darktrace Shares (in a personal capacity or through a nominee) have irrevocably undertaken to do, or to procure to be done, in respect of their own beneficial holdings (or those Darktrace Shares over which they have control), being, in aggregate 6,132,989 Darktrace Shares (representing approximately 0.88 per cent. of the existing issued ordinary share capital of Darktrace) as at 25 April 2024, being the Business Day prior to the date of this announcement. Further details of these undertakings, including the circumstances in which they cease to be binding, are set out in Appendix 3 to this announcement.

Background to and reasons for the Acquisition

·  Thoma Bravo believes that the acquisition of Darktrace represents an attractive opportunity to increase its exposure to the large and growing cybersecurity market, and to invest to accelerate Darktrace’s continued development and further scale the business globally.

·  Darktrace is a global leader in cybersecurity artificial intelligence. Thoma Bravo recognises that Darktrace is a pioneer in using self-learning artificial intelligence to neutralise cyber threats and automate responses to cyber incidents, leveraging its long-standing research and development expertise. Rather than study historic attacks, Darktrace’s technology continuously learns and updates its knowledge of an organisation’s business data and applies that understanding to help transform security operations to a state of proactive cyber resilience. As a result, Darktrace has become a leader in cybersecurity artificial intelligence now providing a full lifecycle approach to cybersecurity enabling its 9,400 customers to identify, stop and respond to all known and unknown threats, across all aspects of an organisation’s cybersecurity tools. Thoma Bravo recognises the strength of Darktrace’s ActiveAI Security Platform, the expertise of its Cambridge-based technology team, the track record of its experienced management team, and the compelling nature of its resilient financial model.

·  The cybersecurity market is evolving at pace and the volume and sophistication of cyber threats and attacks faced is rapidly increasing. However, the market remains fragmented, with few truly global players. Serving the world’s largest customers and enterprises requires Darktrace to continually make significant technology investments and further scale globally, to ensure that its platform can stay ahead of changing cyber threats.

·  Thoma Bravo believes that private ownership can facilitate its development. Thoma Bravo has a long track record of providing capital and strategic support to experienced management teams, growing software and technology companies, and creating highly skilled jobs. A partnership with Thoma Bravo would give Darktrace a unique opportunity to accelerate Darktrace’s growth and the development of AI augmented cyber solutions for its customers and grow over time; in particular, through:

o  continuing Darktrace’s strong organic growth momentum, with help from Thoma Bravo’s deep experience of growing enterprise software businesses as well as through opportunities and learnings from its large software portfolio;

o  utilising Thoma Bravo’s M&A expertise to grow the Darktrace platform in the highly fragmented cybersecurity market; and

o  leveraging Thoma Bravo’s proprietary operational best practices built over the course of 40 years of experience to further build a best-in-class software franchise.

Background to and reasons for the recommendation

·  Since its inception in 2013, Darktrace has rapidly grown to become a successful global leader in cybersecurity artificial intelligence, currently employing over 2,300 people around the world and protecting over 9,400 customers globally from advanced cyber threats. Rather than study historic attacks, Darktrace’s technology continuously learns and updates its knowledge of an organisation’s business data and applies that understanding to help transform security operations to a state of proactive cyber resilience. The Darktrace ActiveAI Security Platform™ provides a full lifecycle approach to cyber resilience that can autonomously spot and respond to known and unknown in progress threats within seconds across the entire organisation, including cloud, apps, email, endpoint, network and operational technology.   

·  In 2021, Darktrace successfully listed on the London Stock Exchange, raising capital to support its future growth, including investments in research and development and product innovation to address the growing threat of cyber disruption, the hiring of senior leaders with deep functional expertise who in turn have evolved the business for its next phase of growth, particularly across its Go-To-Market function alongside investments in the systems, tools and processes needed to support a rapidly growing business. The business saw a temporary impact of these changes in the first quarter of the 2024 fiscal year and now these investments are substantially paying off with Darktrace reporting a strong financial performance in its recent first half results and third quarter trading update.

·  Whilst the Darktrace Board remain confident that Darktrace’s strategy can continue to deliver attractive returns for shareholders and that Darktrace has a strong future as a public company, the Darktrace Board believes that Darktrace’s operating and financial achievements have not been reflected commensurately in its valuation with shares trading at a significant discount to its global peer group. The Darktrace Board recognises that there are risks to, as well as uncertainty as to the timing and delivery of, shareholder returns on the public market and the Acquisition provides an opportunity for Darktrace Shareholders to receive the certainty of cash consideration at a fair value for their shares at this time in Darktrace’s evolution.

·  Through its partnership with Thoma Bravo, Darktrace will be further enabled to deliver on its strategy in a stable and private setting, to create efficiently developed cybersecurity products, leverage differentiated technology to drive product adoption and sales growth, and hire and retain talent to drive innovation and business success.

·  Darktrace is a proud contributor to the British technology, AI and cyber security ecosystem, having substantially gained from the strong academic heritage of machine learning in the UK and the world-class British intelligence community. In addition to the financial terms of the Acquisition, in its evaluation of Thoma Bravo as a suitable owner of Darktrace from the perspective of all stakeholders, the Darktrace Board have also taken into account Thoma Bravo’s intentions for the business, including its employees, customers, suppliers and business partners and is encouraged that Thoma Bravo intends to support the management team as they continue to grow Darktrace as an independent business, headquartered in the UK.

o  This includes Thoma Bravo’s intentions that employees are appropriately incentivised to support the long-term growth of the business, that Darktrace retains its research and development capabilities in the UK and the Netherlands, and that there will be no material restructurings or changes to Darktrace’s Cambridge, UK headquarters, or other business operations.

o  Darktrace continues to be a British tech champion operating at the forefront of AI to solve the problem of cyber security in the UK and around the world and will continue to engage constructively with its stakeholders, including government, to contribute to AI and cyber security resilience.

o  Darktrace will continue to create high skilled jobs in the UK and invest in building world-class cyber AI capabilities to improve UK resilience. Being able to draw on Thoma Bravo’s resources and expertise will support Darktrace’s continued growth globally, resulting in further opportunities for its people.

·  Having carefully considered the Acquisition in accordance with its fiduciary duties the Darktrace Board believes that the terms of the Acquisition, including the price, are such that shareholders should be provided with the opportunity to consider them. The Darktrace Board notes that it has previously reviewed and rejected unsolicited proposed offers from Thoma Bravo on the basis that they did not fairly represent the value of the Darktrace business. The Darktrace Board’s recommendation takes into consideration that:

o  the Acquisition is priced at a premium based on the Announcement Exchange Rate of approximately:

·  44.3 per cent. to the volume-weighted average price of 429.9 pence per Darktrace Share for the three-month period ended 25 April 2024 (being the last Business Day before the date of this announcement);

·  20.0 per cent. to the Closing Price of 517.0 pence per Darktrace Share on 25 April 2024 (being the last Business Day before the date of this announcement);

·  19.6 per cent. to the highest closing share price of 518.6 pence per Darktrace Share for the twelve month period ended 25 April 2024 (being the last Business Day before the date of this announcement);

·  46.0 per cent. to the 21 March 2024 secondary placing price of 425.0 pence per Darktrace Share; and

·  148.1 per cent. to the IPO price of 250 pence per Darktrace Share on 30 April 2021;

o  the Acquisition represents an EV / Revenue multiple of 8.1 times, and EV / Adjusted EBITDA multiple of 34.2 times the Darktrace Group’s revenue of $616 million and Adjusted EBITDA of $146 million for the twelve months ending 31 December 2023, respectively;

o  feedback received by the Darktrace Board from certain of Darktrace’s largest shareholders that it has consulted on the Acquisition has been supportive, as reflected by Thoma Bravo having procured irrevocable commitments to vote in favour of the resolutions relating to the Acquisition at the Meetings, from KKR DA and Summit Partners in respect of, in aggregate, 79,240,911 Darktrace Shares (representing approximately 11.3 per cent. of the existing issued ordinary share capital of Darktrace); and

o  the Acquisition will provide Darktrace access to a strong financial partner in Thoma Bravo with deep sector and US markets expertise who can support Darktrace’s growth and investment in continued innovation in cybersecurity artificial intelligence in order to offer an expanded product portfolio across a deeper set of segments, industries and markets to deliver value to customers. This includes Thoma Bravo’s deep experience and expertise in the US market, which remains a key focus geography for Darktrace.

Irrevocable undertakings

·  Bidco has received irrevocable undertakings from certain Darktrace Directors and senior employees who hold Darktrace Shares to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions at the General Meeting (or in the event that the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer), in respect of, in aggregate, 21,627,725 Darktrace Shares (representing approximately 3.1 per cent. of the existing issued ordinary share capital of Darktrace as at 25 April 2024, being the last Business Day before the date of this announcement). These undertakings will remain binding in the event that a higher competing offer for Darktrace is made.

·  Bidco has also received irrevocable undertakings from certain other Darktrace Shareholders, being KKR DA and Summit Partners, to vote (or, where applicable, procure voting) in favour of the Scheme at the Court Meeting and the Resolutions at the General Meeting (or in the event that the Acquisition is implemented by an Offer, to accept or procure acceptance of such Offer), in respect of, in aggregate, 79,240,911 Darktrace Shares (representing approximately 11.3 per cent. of the existing issued ordinary share capital of Darktrace as at 25 April 2024, being the last Business Day before the date of this announcement). These undertakings will also remain binding in the event that a higher competing offer for Darktrace is made.

·  Bidco has, therefore, received irrevocable undertakings in respect of a total of 100,868,636 Darktrace Shares (representing approximately 14.4 per cent. of the existing issued ordinary share capital of Darktrace as at 25 April 2024, being the last Business Day before the date of this announcement).

·  Further details of these irrevocable undertakings, including the circumstances in which they cease to be binding, are set out in Appendix 3 to this announcement.

Information on Bidco and Thoma Bravo

·  Bidco is a private limited company incorporated in England and Wales and is indirectly wholly-owned by funds managed and/or advised by Thoma Bravo. Bidco was formed for the purposes of the Acquisition and has not traded since its date of incorporation, nor has it entered into any obligations other than in connection with the Acquisition.

·  Thoma Bravo is one of the largest software-focused investors in the world, with over $138 billion in assets under management as of December 31, 2023. The firm invests in growth-oriented, innovative companies operating in the software and technology sectors. Leveraging Thoma Bravo’s deep sector expertise and proven strategic and operational capabilities, the firm collaborates with its portfolio companies to implement operating best practices and drive growth initiatives. Over the past 20 years, Thoma Bravo has acquired or invested in more than 465 companies representing approximately $260 billion in enterprise value (including control and non-control investments). The firm has offices in Chicago, London, Miami, New York and San Francisco.

Information on Darktrace

·  Darktrace is a global leader in cybersecurity artificial intelligence, with a mission to free the world from cyber disruption. The Darktrace ActiveAI Security Platform provides a full lifecycle approach to cyber resilience that, within seconds, can autonomously spot and respond to known and unknown in-progress threats across an organisation’s entire ecosystem, including cloud, apps, email, endpoint, network and operational technology. Darktrace’s research and development teams have made breakthrough innovations resulting in over 175 patent applications filed. The Darktrace Group employs over 2,300 people around the world and protects over 9,400 customers globally from advanced cyber threats. The Darktrace Group is headquartered in Cambridge, UK with offices in 24 countries across Europe, Americas, Asia-Pacific.

·  The Darktrace Shares are listed on the Premium Segment of the Official List and are admitted to trading on the Main Market of the London Stock Exchange.

Timetable and conditions

·  It is intended that the Acquisition will be implemented by way of a Court‑sanctioned scheme of arrangement under Part 26 of the 2006 Act (although Bidco reserves the right to effect the Acquisition by way of an Offer, subject to the consent of the Panel and the terms of the Cooperation Agreement).

·  The Acquisition is conditional on, among other things, the approval of the requisite majority of Scheme Shareholders at the Court Meeting and Darktrace Shareholders at the General Meeting. The Court Meeting and the General Meeting are required to enable Scheme Shareholders and Darktrace Shareholders, respectively, to consider and, if thought fit, vote in favour of the Scheme and the Resolutions to implement the Scheme. In order to become Effective, the Scheme must be approved by a majority in number of Scheme Shareholders, present and voting at the Court Meeting, whether in person or by proxy, representing 75 per cent. or more in value of the Scheme Shares voted. In addition, the Resolutions include a special resolution in connection with implementing the Scheme which must be passed by Darktrace Shareholders representing at least 75 per cent. of votes cast at the General Meeting. In addition, following the Court Meeting, the Scheme must be sanctioned by the Court.

·  The Conditions to the Acquisition are set out in full in Appendix 1 to this announcement along with certain other terms; the full terms and conditions will be provided in the Scheme Document. The Conditions include the receipt of regulatory approvals as further described in this announcement.

·  It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting, together with the associated forms of proxy, will be posted to Darktrace Shareholders as soon as practicable and in any event within 28 days of this announcement (or such later time as Darktrace, Bidco and the Panel agree) and the Meetings are expected to be held as soon as reasonably practicable thereafter. Subject to certain restrictions relating to persons resident in Restricted Jurisdictions, the Scheme Document will also be made available on Darktrace’s website at https://ir.darktrace.com.

·  The Acquisition is currently expected to complete during the third or fourth quarter of 2024, subject to the satisfaction or (where applicable) waiver of the Conditions. An expected timetable of key events relating to the Acquisition will be set out in the Scheme Document.

·  Commenting on this announcement, Gordon Hurst, the Chair of Darktrace, said:

“The proposed offer represents an attractive premium and an opportunity for shareholders to receive the certainty of a cash consideration at a fair value for their shares.

“The proposed acquisition will provide Darktrace access to a strong financial partner in Thoma Bravo, with deep software sector expertise, who can enhance the Company’s position as a best-in-class cyber AI business headquartered in the UK.“

·  Commenting on this announcement, Poppy Gustafsson OBE, the CEO of Darktrace, said:

“I am immensely proud of our brilliant business and people. From our base in Cambridge, we are building a world-leading company using a unique form of artificial intelligence to address the societal challenge of cybersecurity.

This proposed offer represents the next stage in our growth journey and I am excited by the many opportunities we have ahead of us. Our technology has never been more relevant in a world increasingly threatened by AI-powered cyberattacks. In the face of this, we are expanding our product portfolio, entering new markets, and focused on delivering for our customers, partners and colleagues.”

·  Commenting on this announcement, Andrew Almeida, Partner of Thoma Bravo, said:

“Darktrace is at the very cutting edge of cybersecurity technology, and we have long been admirers of its platform and capability in artificial intelligence. The pace of innovation in cybersecurity is accelerating in response to cyber threats that are simultaneously complex, global and sophisticated. Darktrace is driven by a culture of innovation and we are excited by the opportunity to work alongside Darktrace’s team and accelerate its development into a scaled, global leader, further strengthening its capability and offer to customers. Thoma Bravo has been investing exclusively in software for over twenty years and we will bring to bear the full range of our platform, operational expertise and deep experience of cybersecurity in supporting Darktrace’s growth.”