Mimecast Agrees to be Acquired for $5.8B; Shares Rise

Cloud security and risk management services provider Mimecast Ltd. (NASDAQ: MIME) has signed an agreement under which funds advised by U.K.-based investment firm Permira will acquire it for approximately $5.8 billion.

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Following the announcement, shares of Mimecast closed nearly 6% up on Tuesday. The stock gained another 0.3% in the extended trading session to end the day at $79.60.

Headquartered in London, the company develops a suite of cloud services designed to offer cyber resilience for email and deliver comprehensive email risk management beyond the primary mail server.

Details of the Transaction

As per the terms of the agreement, shareholders of Mimecast will get $80 per share in cash. The price represents a premium of nearly 16% to the stock’s closing price on October 27.

After the completion of the acquisition, which is expected in the first half of next year, Mimecast will become a privately held company and its shares will not be listed on any public market.

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Management Comments

The Chairman and CEO of Mimecast, Peter Bauer, said, “Permira has a strong track record of collaboratively supporting companies’ growth ambitions and strategic goals, and we look forward to working together to further strengthen the cyber security and resilience of organizations around the world.”

The Principal at Permira, Pierre Pozzo, said, “We share the company’s (Mimecast) belief in the significant opportunity ahead in cyber security across all collaboration channels, especially as more individuals have transitioned to a remote workplace. We look forward to partnering with the Mimecast team to accelerate the product roadmap and expand the go-to-market organization in order to drive further growth.”

Wall Street’s Take

After the deal was announced, Northland Securities analyst Nehal Chokshi downgraded the rating on the stock to Hold from Buy and lowered the price target from $85 to $80 (0.8% upside potential).

Additionally, Needham analyst Alex Henderson downgraded Mimecast from Buy to Hold and reduced the price target to $80 from $88.

Overall, the stock has a Moderate Buy consensus rating based on 6 Buys and 7 Holds. The average Mimecast price target of $81.58 implies 2.8% upside potential. Shares have gained 65.2% over the past year.

MIME Smart Score

According to TipRanks’ Smart Score rating system, Mimecast scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.