Thales Group, a leading technology conglomerate, has recently announced its acquisition of Imperva Inc. from private equity firm Thoma Bravo for a staggering $3.6 billion. The purpose of this acquisition is to expand Thales’ data and application security offerings. The deal comes four years after Thoma Bravo purchased Imperva for $2.1 billion, showcasing the continuous growth and development of both companies in the cybersecurity market.
Thales plans to integrate Imperva’s data and application security products into its existing offerings, with a particular focus on Distributed Denial of Service (DDoS) and API defense. These additions will expand Thales’ role in the Digital Identity and Security (DIS) business, ensuring a stronger cybersecurity portfolio that emphasizes identity, data security, and application security. The integration is expected to bring in approximately $500 million in revenue for Thales, indicating the significant impact this acquisition will have on the company’s financial performance.
In a press release, Thales stated its intention to combine all its civil cyber activities within DIS starting in January 2024. This strategic move reflects Thales’ commitment to becoming a global leader in cybersecurity and consolidating its various operations. By regrouping its cyber activities, Thales aims to streamline its efforts, enhance efficiency, and maximize its presence in the cybersecurity market.
Through the acquisition of Imperva, Thales anticipates strong organic sales growth of 6%-7% in its DIS sector over the next four years, projecting revenues of approximately $6 billion by 2027. This growth aligns with Thales’ expansion strategy, which extends beyond cybersecurity to other sectors such as defense, security, aerospace, space, and transportation.
One of the key reasons behind Thales’ interest in Imperva is the growing need to protect critical applications, APIs, and data. Recent trends have shown that ransomware groups are increasingly focusing on data exfiltration rather than encryption to pressure victim organizations into paying. Extortion threats have become more aggressive as these groups leak sensitive data through public leak sites. Consequently, enterprises and cybersecurity insurers are actively seeking robust solutions to combat these evolving tactics.
Furthermore, with the rise of massive DDoS attacks, Imperva’s Web Application Firewall (WAF) becomes a significant asset for Thales. Just last month, Microsoft endured a layer 7 DDoS attack that caused substantial disruptions across its cloud services and applications. Implementing Azure WAF was highly recommended to mitigate these types of cyber threats.
Sebastian Cano, Senior Vice President of Cloud Protection and Licensing at Thales, highlighted the exponential growth of attacks at the API level. He identified customer data management as another challenge for Thales, noting that the company previously lacked visibility into the data it needed to encrypt. However, with the capabilities gained from Imperva’s Data Security platform, Thales will now have constant access to all customer data, allowing them to better protect it. Cano believes that this new capability will boost the company’s revenue as the volume of encrypted data increases.
According to John Grady, an analyst with TechTarget’s Enterprise Security Group, the acquisition demonstrates Thales’ interest in expanding its presence in the application security market. While Thales is already a major player in data security, Imperva brings valuable expertise in areas such as web and API security. However, Grady also highlighted the need for Thales to work on integrating these products and developing go-to-market synergies to maximize its value.
Regarding Thoma Bravo’s role in the acquisition, Grady explained that it aligns with the private equity firm’s typical investment strategy, where they hold onto companies for 3 to 4 years before selling them. This sale enables Thoma Bravo to demonstrate a good return on its investment and injects cash into their portfolio for future opportunities.
Heidi Shey, Principal Analyst at Forrester, remarked on the potential impact of the acquisition on Thales, particularly in the application security market. Although Thales already possesses a strong presence in data security, the integration of Imperva’s products will require diligent effort. However, Shey emphasized the importance of maintaining focus and delivering on existing plans to ensure satisfaction for both new and existing customers.
The acquisition is expected to be finalized at the beginning of 2024, solidifying Thales’ position in the cybersecurity market and accelerating its growth trajectory. With Imperva’s integrated products, Thales aims to offer comprehensive and advanced solutions that address the evolving cyber threats faced by organizations globally.