Websense Inc said it had agreed to be taken private by Vista Equity Partners in a deal that values the online security firm at about $907 million, a move that should come as a relief to investors after years of weak sales from its legacy business.
The offer of $24.75 per share represents a roughly 29 percent premium to Websense's Friday close. Websense shares rose to just above the offer price to a near two-year high in morning trading on the Nasdaq.
"After years of speculation, investors will be rubbing their eyes this morning that Websense finally got acquired and will go the route of other security software vendors that got the private equity bid," FBR Capital analyst Daniel Ives said.
The company joins a list of security software vendors, including Blue Coat that was bought by Thoma Bravo in 2011, to get private equity bids.
The company's growth rate has slowed in the past few years as its core web filtering business weakened and it reported a slight revenue decline last year.
Websense stock, which peaked at $34.87 in 2005, has since fallen 22 percent until Friday's close.
"This morning's acquisition speaks to the value of security software ... a surge of M&A activity is poised to hit the sector over the next six to 12 months as larger technology players and private equity look to get a larger piece of the security pie," he said.
Ives added that the acquisition would allow Websense to focus on its promising Triton business that makes web security gateway and e-mail security products.
Websense, which said it expected the deal to close before the end of the third quarter, said its senior management was expected to continue with the company and its headquarters would remain in San Diego.
BofA Merrill Lynch is the financial adviser to Websense and Cooley LLP its legal adviser.
Kirkland & Ellis LLP is Vista's legal adviser and J.P. Morgan Securities, RBC Capital Markets and Guggenheim Partners have agreed to provide debt financing for the deal.
Vista Equity is a private equity firm that invests primarily in software companies and has about $6 billion in assets.
(Reporting by Sayantani Ghosh in Bangalore; Editing by Roshni Menon and Don Sebastian)