F5 Networks to acquire Shape Security for approximately $1B in cash
F5 Networks (FFIV) and Shape Security announced a definitive agreement under which F5 will acquire all issued and outstanding shares of the privately held Shape for a total enterprise value of approximately $1B in cash, subject to certain adjustments.
Shape protects the largest banks, airlines, retailers, and government agencies with sophisticated bot, fraud, and abuse defense.
In particular, Shape defends against credential stuffing attacks, where cybercriminals use stolen passwords from third-party data breaches to take over other online accounts.
Shape has built an advanced platform, utilizing artificial intelligence and machine learning, supported by powerful cloud-based analytics to protect against attacks that bypass other security and fraud controls.
Upon closing of the acquisition, Derek Smith, and the leadership team will join F5 in key management roles.
Shape will remain located in their current Santa Clara headquarters.
The acquisition of Shape is consistent with F5’s vision to build the best end-to-end multi-cloud application services company. It accelerates F5’s product and total revenue growth; speeds F5’s transition to a software- and SaaS-driven business model; and is expected to meaningfully increase F5’s software subscription mix in fiscal year 2020.
F5 expects to achieve breakeven non-GAAP EPS within 24 months of closing the acquisition and anticipates that the combination will be accretive to free cash flow per share within 12 months of closing.
F5 expects to fund the transaction through cash on its balance sheet and $400M in a Senior Unsecured Term Loan A. The acquisition has been approved by the boards of directors of both F5 and Shape.
The acquisition is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the first calendar quarter of 2020.
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