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Advent calls off Forescout acquisition

On what was scheduled to be the closing day, Forescout Technologies instead announced Advent International will not proceed with the $1.9 billion acquisition as planned.

Private equity firm Advent International is putting its acquisition of network security vendor Forescout Technologies on hold.

In February, Advent International agreed to acquire Forescout Technologies in an all-cash transaction valued at $1.9 billion, with a tentative closing date to take place in the second quarter of 2020.

Instead, Forescout today released a statement saying it received notice from Advent on May 15 that the deal was off. "Advent provided notice that it would not be proceeding to consummate the acquisition of Forescout on May 18, 2020 as scheduled. Forescout and Advent are engaged in ongoing discussions regarding timing to close and the terms of the transaction. There can be no assurance that Forescout and Advent will be able to reach agreement on terms."

It's unclear why the acquisition was put on hold, but Forescout president and CEO Michael DeCesare issued a public statement citing uncertainty around the COVID-19 pandemic.

"This is an uncertain time for everyone, as businesses and communities across the world navigate the challenges created by the COVID-19 pandemic," DeCesare said in the statement. "We continue to believe that Advent is the right partner for Forescout and we remain committed to completing the transaction in the near-term. We thank our employees for their extraordinary efforts and commitment to Forescout, and we remain focused on continuing our course of advancing our innovation roadmap and strategic cloud and business transformation."

Forescout was founded in 2000 and was primarily focused on network access control and security monitoring. Forescout went public in 2017, raising approximately $117 million, and the company shifted more to IoT and industrial control system security. The acquisition was first announced in February in tandem with Forescout's 2019 fourth quarter earnings, which were below Wall Street expectations.

In April, investment firm Spruce Point Capital Management issued a public letter recommending that Advent reexamine its agreement to purchase Forescout Technologies.

"Today's news is one-step toward validating our detailed report containing incisive opinions that Advent International and Crosspoint Capital over-estimated Forescout's financial prospects, applying too high a valuation at $33 per share," Ben Axler, founder and chief investment officer at Spruce Point, said in an email to SearchSecurity.

SearchSecurity reached out to Advent International, but an Advent spokesperson declined to comment.

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