Nortel spin-off Entrust in $114-M merger deal with Thoma Bravo

Entrust Inc., a digital identification and information security firm that holds several Canadian government contracts, has entered into a $114 million agreement to be acquired by private equity firm Thoma Bravo, LLC.

Shareholders of Entrust still have to approve the deal, but the Plano, Dallas-based company’s chief is heralding the agreement as a win-win situation for both firms. “

The deal will deliver great value to Entrust shareholders and place the company in a position to pursue its bold goals while providing Thoma Bravo with the strategic security platform it has been searching,” said Bill Conner, president and CEO of Entrust.

“Thoma Bravo looks forward to strengthening Entrust’s global leadership position in each of its three security platform areas, Scott Crabill, managing partner for San Francisco-based Thoma Bravo said.

Under the terms of the agreement, Entrust shareholder will receive $1.85 in cash for each Entrust common stock they hold, representing a premium of approximately 22.4 per cent over the company’s average closing share price of $1.51 during the 30 trading days ending in April 9.

The board of directors of Entrust has approved the merger agreement and will recommend that shareholders adopt the agreement. The deal is subject to closing conditions including the approval of Entrust stockholders and requisite regulatory approvals.

Conner said there are no financing conditions to the obligations of Thoma Bravo to consummate the transaction and Entrust has the next 30 days to solicit alternative proposals for other interested parties.

Entrust develops public key infrastructure (PKI) and secure socket layer (SSL) technology for encrypting and transmitting documents in electronic digital via Internet.

Entrust started out in Ottawa under then telecom giant Nortel Networks Corp. Entrust developed PKI software within Nortel’s Secure Network’s Group and in the early 1990s snagged a deal to develop PKI software for the Department of National Defense.

Nortel spun off the company in 1997 when the company was incorporated in Maryland as part of a tax strategy. After years of financial trouble, Nortel is now unloading more of its assets.

Today, Entrust secures digital identities and information for consumers, companies and governments in more than 2,000 organizations in 60 countries.

The company still maintains its Canadian headquarters in Ottawa, plus sales offices in Montreal and Toronto.

Entrust continues to handle security contracts for the Canadian federal government and other provincial governments including Ontario and British Columbia, said Conner.

The company also handles risk-based authentication, fraud detection and certificates services for financial companies such as JP Morgan, Citibank and RBC.

Thoma Bravo is a 28-year-old private equity investment firm. The company currently manages approximately $2.5 billion in equity capital. Thoma Bravo has completed 38 acquisitions in the software industry with total earnings of $600 million.

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