Shares of Barracuda Networks (NYSE: CUDA) jumped 16% on Monday after private equity firm Thoma Bravo agreed to acquire the security and data protection company for $1.6 billion. The offer of $27.55 per share was above Barracuda's 52-week high, but significantly lower than the all-time high of $46 it hit back in 2015.

The key facts

Barracuda, which was founded in 2003, provides security solutions for cloud-connected networks and applications. The Silicon Valley-based company serves over 150,000 organizations in more than 100 countries, employs over 1,000 people, and works with more than 5,000 partners.

Barracuda CEO BJ Jenkins stated that the proposed deal "offers an opportunity for us to accelerate our growth with our industry-leading security platform that's purpose-built for highly distributed, diverse cloud and hybrid environment."

Barracuda's growth has been mediocre compared to many of its cybersecurity rivals. Analysts expect its revenue to rise 7% this year, but for earnings decline 9% on changes in its product mix, higher expenses related to warranties and hardware replacement programs, and higher investments in its cloud infrastructure.

The consolidation continues...

Thoma Bravo, which also recently acquired analytics firm Qlik Technologies, is just one of several private equity firms that are consolidating the software market. Its peer Vista Equity Partners notably bought marketing software maker Marketo and event-management company Cvent last year.

Thoma Bravo is paying a pretty high premium for Barracuda, which now trades at 139 times earnings and 4 times sales. But under private management, its products will likely be integrated with the firm's other software products to generate synergies.

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Leo Sun has no position in any of the stocks mentioned.

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