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Carbonite-Webroot Mulls Private Equity Buyout Offers: Report

Carbonite, parent of Webroot, is evaluating private equity buyout offers from KKR and Evergreen Coast (a technology affiliate of Elliott Management), with Vector Capital also in the hunt for the data protection and cybersecurity technology company, according to PE Hub and other sources.

UPDATED November 11, 2019: Carbonite has been acquired by OpenText.

Earlier November 8, 2019 report continues here: ChannelE2E has not independently confirmed the names of the private equity bidders. But we have confirmed a  sale agreement could be announced on or before Tuesday, November 12 — the date of the company’s next quarterly earnings call, according to sources close to the bidding process.

Still, there’s a chance no deal may be announced since Carbonite wants at least $20 per share for the data privacy, data backup and recovery (BDR) and cybersecurity business, and some bids are lower than that figure, sources tell ChannelE2E.

Original story from November 5, 2019 appears below.

Among the potential variables at play, Carbonite could:

  • Remain publicly held amid the search for a new leader to succeed interim CEO Steve Munford. For his part, Munford has led Carbonite since former CEO Mohamad Ali stepped down in July 2019 to join a media company. 
  • Sell itself to a private equity suitor, which would allow the data protection and cybersecurity company to fine-tune its business outside of Wall Street’s quarterly earnings expectations.
  • Exit to a strategic buyer in the technology sector — though speculation about that scenario has been minimal.

Carbonite has been considering a potential company sale to private equity firms and other suitors since at least September 2019, multiple reports say. The company in late October 2019 reached the second round of company sale discussions, according to DealReporter.

To date, Carbonite has neither confirmed nor commented about the rumored M&A discussions.

Carbonite: Why the Buyout Rumors Started

Carbonite acquired Webroot for $618.5 million in February 2019. Webroot, which promotes cybersecurity software to small business MSPs, has performed well. But Carbonite’s data protection business delivered weaker-than-expected revenues in mid-2019, which triggered a steep stock decline at the time.

Carbonite’s current valuation is roughly $627.9 million — or only slightly more than the Webroot buyout valuation.

Several Webroot veterans in September 2019 were promoted onto Carbonite’s executive team. And the company is expected to announce a unified channel partner program in 2020.

Carbonite Ownership: Deal or No Deal?

Admittedly, Carbonite could be mum about the M&A chatter on the November 12 earnings call. But we suspect the company will disclose some sort of search for “strategic alternatives” or perhaps even a company sale at that time.

If neither type of statement surfaces, it’s safe to expect Munford to offer an update on the permanent CEO search.

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