Mimecast Eyes Sale, Proofpoint Seen As Potential Buyer: Report

Mimecast is probing a possible sale and top email security rival Proofpoint is expected to emerge as a potential buyer after getting acquired themselves this year, The Wall Street Journal reported.

Mimecast is probing a possible sale and top email security rival Proofpoint is expected to emerge as a potential buyer after getting acquired themselves this year.

Lexington, Mass.-based Mimecast is working with bankers to consider options including a sale or taking a big investment, people familiar with the matter told The Wall Street Journal. The process is at an early stage and there is no guarantee it will result in a deal, The Wall Street Journal reported.

Mimecast’s stock is up $4.62 (6.7 percent) in trading Thursday morning to $72.56 per share, which is the highest the company’s stock has ever traded since going public in November 2015. Mimecast may be worth between $80 per share and $118 per share in a sale, according to Stephens analyst Brian Colley. The company has a valuation of $4.82 billion and declined comment on The Wall Street Journal report.

The Mimecast report comes two months after Thoma Bravo purchased Proofpoint for $12.3 billion in the largest cybersecurity deal of all time. While Proofpoint and Mimecast have similar technology, their client bases are different since Proofpoint historically focused on the enterprise while Mimecast sold to SMB and mid-market firms. Neither Proofpoint nor Thoma Bravo responded to requests for comment.

[Related: Mimecast Axes SolarWinds Orion For Cisco NetFlow After Hack]

All three of the publicly traded email security vendors have gone or are considering going private this year, while Reuters reporting earlier this month that Zix had hired financial services giant Citigroup to negotiate a sale of the email security vendor to other companies or private equity firms. There is no certainty any deal regarding the sale of Dallas-based Zix will be reached, sources told Reuters.

Sunnyvale, Calif.-based Proofpoint is the world’s largest pure-play email security provider, with revenue in 2020 climbing to $1.05 billion, up 18 percent from $888.2 million a year earlier. Taking the silver is Mimecast, which saw revenue surge in its fiscal year ended March 31, 2021, to $501.4 million, up 17.4 percent from $427 million a year earlier.

And coming in third is Zix, who saw revenue for the 2020 calendar year surge to $218.5 million, up 26 percent from $173.4 million in 2019 due primarily to its $275 million purchase of email and web security stalwart AppRiver in January 2019. Zix today has a valuation of $471 million and moved into the MSP market through its acquisition of AppRiver.

Mimecast has rebounded from a rocky start to 2021 after disclosing in January that Russian foreign intelligence service (SVR) hackers compromised a Mimecast certificate used to authenticate several of the company’s products to Microsoft 365 Exchange Web Services. The SVR got in by exploiting a backdoor in the SolarWinds Orion network monitoring software the company had previously used.

Once inside, the SVR hackers downloaded Mimecast source code repositories and accessed and potentially extracted encrypted customer service account credentials that establish a connection from their Mimecast tenants to on-premises and cloud services. In response to the attack, Mimecast decommissioned its SolarWinds Orion software and replaced it with a Cisco NetFlow monitoring system.

In addition, Mimecast announced in February plans to cut 80 of its roughly 1,800 positions to help the company shift upmarket and provide more resources to larger enterprises while leveraging automation and efficiency for mid-market and SMB customers. Specifically, CEO Peter Bauer said Mimecast plans to expand and strengthen its enterprise team to give those clients a customized, higher-touch experience.

Mimecast conducted 75 percent of its business through the channel in the company’s most recent fiscal year, targeting large enterprises through partners like CDW and Dimension Data and mid-market clients through Softchoice, SHI, CDW and Softcat. Jonathan Corini joined Mimecast from Forescout in 2020 as global channel chief, while Kurt Mills came over from FireMon in 2019 to lead North American partners.