Shares of Barracuda Networks Inc. (NYSE: CUDA) were up 16.5% as of 2 p.m. EST Monday after the networking products specialist agreed to be acquired by private equity firm Thoma Bravo, LLC, in a "going-private" deal worth $1.6 billion.
More specifically, Thoma Bravo will pay Barracuda Networks investors $27.55 per share in cash for each common share of Barracuda Networks they hold. That's a 16.2% premium to Friday's closing price, and a 22.5% premium to Barracuda's 10-day average stock price.
"We believe the proposed transaction 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 environments," stated Barracuda Networks CEO BJ Jenkins. "We will continue Barracuda's tradition of delivering easy-to-use, full-featured solutions that can be deployed in the way that makes sense for our customers."
To be fair, the move also came on the heels of a big post-earnings plunge last month. Barracuda Networks stock still hadn't recovered after dropping nearly 14% in just two days after the company announced reasonably strong fiscal second-quarter results, but followed with underwhelming forward financial guidance relative to Wall Street's expectations.
At the time, Jenkins noted that the period marked four straight quarters of double-digit billings growth for the company, with targeted investments resulting in "continued traction" for key markets including email and public cloud security.
Barracuda Networks' board has unanimously approved the deal and voiced its belief that the "transaction maximizes shareholder value." So assuming the company can secure the approval of both shareholders and regulators, the acquisition is expected to close before the end of February 2018. With Barracuda Networks stock currently trading slightly above the agreed acquisition price -- and unless waiting to sell will result in more favorable long-term capital gains tax treatment -- I think shareholders would be wise to take their profits and put them to work elsewhere.