Francisco, Vector acquire Watchguard for $151m

After an initial announcement saying Francisco Partners would acquire the publicly traded internet security software maker on its own, the two firms have announced they will co-invest equally.

Internet security software-maker Watchguard Technologies has agreed to be acquired by Francisco Partners, a technology-focused private equity firm based in Menlo Park, and San Francisco-based Vector Capital, for $151 million (€118 million).

According to the agreement Watchguard’s shareholders will receive $4.25 per share in cash.

The deal follows a bid made in May by Vector Capital, which is Watchguard’s second-largest shareholder. Vector’s original bid was $5.10 per share, but the offer was lowered to $4.65 per share in June.

Francisco originally announced it would be acquiring Watchguard on its own, and it appeared the Vector bid had been rejected. However today the two firms released a joint statement saying that Vector would be co-investing equally with Francisco. As part of the agreement, Vector, which holds 9.4 percent of the company’s outstanding shares, has agreed to vote its shares in support of the acquisition.

An additional 5.8 percent of Watchguard’s shareholders, all directors and officers, have already agreed to support the transaction, the company said in a statement.

“As a shareholder of Watchguard, we have long believed that the company’s true potential can only be realised as a private enterprise,” said Vector managing partner Alex Slusky in a statement.

In July, Watchguard announced it had settled a lawsuit against rival internet security company SonicWall for alleged misappropriation of Watchguard trade secrets.