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Law360 (May 18, 2020, 4:12 PM EDT ) The $1.9 billion private equity takeover of publicly traded cybersecurity firm Forescout Technologies has been put on hold because of uncertainty resulting from the coronavirus pandemic, Forescout said Monday, and there's no guarantee the deal will go through as planned.
The transaction, guided by Wilson Sonsini and Ropes & Gray, was set to see Advent International, along with co-investor and adviser Crosspoint Capital Partners, pick up Forescout for $33 per share. The takeover was expected to be completed on Monday, and all necessary approvals have been received, but Advent informed Forescout on Friday that it would not be closing the deal as scheduled, Forescout said.
The two sides are now negotiating when and how they can close the deal, although Forescout cautioned that there's no guarantee an agreement will be reached.
"This is an uncertain time for everyone, as businesses and communities across the world navigate the challenges created by the COVID-19 pandemic," said Michael DeCesare, CEO and president of Forescout. "We continue to believe that Advent is the right partner for Forescout, and we remain committed to completing the transaction in the near-term."
The take-private deal was originally inked in February Forescout, which is based in San Jose, California, provides software that helps organizations monitor the devices connected to their network. The transaction was unanimously approved by the Forescout board of directors, and the merger agreement contained a 30-day go-shop provision that expired March 8.
The purchase price represents a 30% premium over Forescout's closing share price on Oct. 18, 2019, which is the last trading day before two other firms, Corvex Management LP and Jericho Capital Asset Management LP, disclosed that they had formed a partnership to approach Forescout that had amassed a total 14.5% stake in the company.
A representative for Corvex and Jericho did not immediately respond to an email asking whether they might still pursue a deal for Forescout if the company's agreement with Advent winds up getting terminated.
Forescout has been a public company since October 2017, when it held an upsized initial public offering that saw the company sell 5.3 million shares at $22 apiece, raising $116 million in total. Forescout was also advised by Wilson Sonsini on its IPO.
About a year prior to hitting the public markets, Forescout picked up $76 million in financing in a round led by investment management firm Wellington Management Co. That funding round, which was announced in January 2016, valued Forescout at $1 billion, making it a "unicorn," which is the term used for private, venture-backed companies that have hit at least a $1 billion valuation.
Representatives for Crosspoint did not immediately respond to requests for comment on Monday. Representatives for Advent declined to comment.
Wilson Sonsini Goodrich & Rosati PC advised Forescout on the transaction with Advent, and Morgan Stanley & Co. LLC served as exclusive financial adviser.
The Wilson Sonsini team advising Forescout includes corporate/M&A partners Steven Bochner, Lisa Stimmell and Douglas Schnell and associates Emma Sarkisyan, David Lee, Chris Harlem and Zack Lenox; employee benefits and compensation partners David Thomas and Jaqueline Tokuda and associate Ena Kaur; corporate finance partner Dana Hall and associates Michael Rosati and Sam Millang; tax partner Myra Sutanto Shen; privacy partner Matt Staples and associate Daniel Chen; technology transactions partner Manja Sachet and associates James Gannon, Blair Nelson, Barclay Oudersluys, Nora Shafie and Andrew Shoals; regulatory associates Seth Cowell and Anne Seymour; antitrust of counsel Christopher Williams; real estate partner James McCann, associate Jerimiah Nelson and counsel Martin Sul; employment law of counsel Rebecca Stuart and associate Nedim Novakovic.
Ropes & Gray LLP is serving as legal counsel to Advent on the deal, and financing is being arranged and provided by Owl Rock Capital Corp.
The Ropes & Gray team is led by private equity partner Amanda Morrison and includes private equity partner Chau Le; finance partners Byung Choi and Andrea Hwang; M&A partner Thomas Holden; tax partner Adam Greenwood; benefits partner Renata Ferrari; privacy and data security partner Edward McNicholas; labor and employment partner Megan Bisk; and intellectual property transactions partner Megan Baca.
Counsel information for Crosspoint was not immediately available.
--Additional reporting by Tom Zanki and Matthew Perlman. Editing by Alanna Weissman.
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