Israeli cyber company Tufin will be sold to Turn/River Capital at a value of $ 570 million

The Israeli cyber company Tufin has announced that it will be sold to Turn / River Capital - an investment company that focuses on investments in software companies - at a value of $ 570 million, which is about 60% higher than the company's current value. Shares of Tuffin soared 40% in early trading on Wall Street, to $ 12.8. Tufin shareholders will receive $ 13 in cash per share, a 44% premium to the company’s share price last night at the close of trading on Wall Street.
According to the agreement, in the coming month, until May 5, there will be a period of "go-shop" - that is, Tufin will be able to continue looking for a potential buyer for the company. Tuffin expects the deal to be completed in the second quarter of 2022, after which the company will be delisted and become a private company. The founders of Tufin, CEO Reuven (Ruby) Kituv and VP of Technology Reuven Harrison, have decided to vote in favor of the agreement.
Tufin provides comprehensive information security solutions to organizations, and helps them implement uniform information security policies in different cloud environments. The company's products set the rules for communication between details, systems and applications, and provide automated information-based information security, so that customers are able to shorten the time to make changes to the organization's information systems - from days to minutes.
The company was founded in 2005, and in 2019 was listed on the New York Stock Exchange at a value of $ 454 million, after the money, with the share price at the issue set at $ 14 - the top end of the $ 14-12 price range per share planned for the issue. The company is now being sold at a lower share price.
Tuffin reported a 10% increase in revenue in 2021, to about $ 111 million, compared to 2020. The company's operating loss also increased, by 9%, to $ 36 million. Adjusted non-GAAP operating loss was $ 22 million. The company's net loss in 2021 increased 4% to $ 36.9 million, or 4 cents a share, thus surpassing analysts' forecasts for a loss of 7 cents a share.
The company's forecast for 2022 was for revenue increases to $ 129-123 million. However, at the same time the company expected that the adjusted operating loss would increase this year to about $ 29-24 million. Tuffin's cash balances as of the end of 2021 stand at $ 89 million. Since its issuance, the Tufin share has fallen by 57%.
Ruby Kituv, CEO of Tufin, referred to the last three years in which the company was a public company and said that “we did a lot, it was not easy for us during the Corona period, but we got out of this crisis and managed to embark on a path of growth. The transition to a private company is another milestone in the life of the company. I believe the stock was lacking in pricing, but we have no impact on the stock. "
According to him, this is an excellent move for the company and for our investors, with the value of the company as embodied in the transaction being a nice premium on the share price today and in recent months.
"They are a fund that specializes in moving companies to a subscription model. We started a year ago moving to a working model in annual subscriptions. It's a three-year move, which is much easier to do as a private company than as a public company.
"If you make such a move aggressively and finish it within a year, it affects revenue as well as cash flow. As a private company we can reach profitability faster. We accepted the offer and decided it was the best move for both the company and the investors," Kituv said.