TPG to buy Forcepoint’s government cyber unit in a deal valued at $2.45 billion

Private equity firm TPG is set to acquire the government cybersecurity business of Forcepoint, a software company owned by Francisco Partners, in a deal worth $2.45 billion, the company said on Monday.

While the specific terms of the agreement have not been disclosed, the acquisition reflects the trend of private equity firms targeting cybersecurity companies, driven by the increasing digital presence of governments and businesses, which is expected to fuel demand in the sector.

In a news release on its website, Forcepoint said the acquisition will enable its G2CI unit “to operate with greater flexibility and focus, positioning the new company to grow its platform as a comprehensive, next-generation cybersecurity provider for defense, intelligence, and critical national infrastructure organizations across the globe.”

“It’s our mission to support the national security and intelligence communities by providing trusted, data-driven security solutions that enable them to collaborate and conduct mission-critical work securely and effectively,” said Sean Berg, President, Global Governments and Critical Infrastructure at Forcepoint. “TPG has a long history of carving-out, building, and scaling world-class cybersecurity companies. We’re confident that this partnership, along with continued support from Francisco Partners, will provide us the resources and expertise to strengthen our position as a partner of choice for government agencies.”

According to Reuters, TPG’s purchase of Forcepoint’s Global Governments and Critical Infrastructure division would grant them control over the key infrastructure services provided to US government and federal agencies. Meanwhile, Francisco Partners, the current owner of Forcepoint, will retain a minority stake in the company and continue as a controlling shareholder in the Forcepoint Commercial business.

“We are proud to have built an industry-leading portfolio of security products that protect government and enterprise customers’ infrastructure, people, and data,” said Manny Rivelo, CEO of Forcepoint. “This transaction represents an exciting opportunity for the Forcepoint G2CI business to continue its trajectory of growth, delivering high assurance security to government and critical infrastructure customers worldwide. Similarly, it enables the Forcepoint Commercial business to further focus investment and innovation in accelerating growth of the company’s Data-first SASE platform, Forcepoint ONE, while delivering increased value to our customers.”

Forcepoint had previously expressed its intention to explore the sale of its government security unit for over $2 billion in April, as the company shifted its focus towards expanding its commercial business catering to large corporations. Some notable customers of Forcepoint include IBM, CVS Health, Microsoft, Boeing, and Qualcomm.

This is not the first collaboration between Francisco Partners and TPG, as they had previously joined forces to acquire Dell Technologies’ cloud business, Boomi, for $4 billion in 2021.

TPG has a history of investing in cybersecurity companies, including McAfee, Zscaler, Tanium, and Expanse, among others. The investment in Forcepoint’s Government-to-Critical Infrastructure (G2CI) division will be made through TPG Capital, the firm’s late-stage private equity platform in the United States and Europe.

The deal is expected to be finalized in the fourth quarter of 2023. Financial advisory services for Forcepoint and Francisco Partners were provided by Citi and Barclays, while Piper Sandler served as the financial advisor to TPG during the transaction.

Founded in 1994 as NetPartners in Sorrento Valley, San Diego by Phil Trubey, Forcepoint is a cybersecurity company that specializes in user and data security. With a strong focus on protecting organizations, Forcepoint helps customers proactively safeguard their critical data and IP.