Senetas sells Votiro to Menlo Security for USD $37.5m

Senetas has announced the sale of its subsidiary Votiro to Californian security company Menlo Security for USD $37.5 million (approximately AUD $60 million), received as a combination of cash and shares.

The transaction involves Votiro selling its wholly-owned Israeli subsidiary, Votiro Cybersec Limited, to Menlo Security. The payment will be structured as 40% cash and 60% in shares of Menlo Security, a company focused on cybersecurity products. Senetas currently holds a controlling share of approximately 55.7% in Votiro and will maintain exposure through the shares Votiro holds in Menlo.

The deal encompasses a base consideration with potential for additional sums should certain conditions be met. About 45% of the base payment will be deferred for 12 months, contingent on the renewal of key customer contracts.

Andrew Wilson, Chief Executive Officer of Senetas, expressed optimism about the agreement. "Votiro Cybersec Limited becoming part of the Menlo business represents a significant opportunity to accelerate the growth of the underlying Votiro business. Senetas's ongoing exposure to Menlo via the shares Votiro received as consideration for the transaction also has the potential to deliver substantial upside to both Votiro and Senetas shareholders by providing them with exposure to a far larger and well-financed US-based security company."

Wilson further commented on the strategic benefits of the acquisition. "Menlo (strengthened by the acquisition of the underlying Votiro business) is expected to significantly grow its market share, and we are excited to be an indirect investor in this larger business in the future. A key reason we chose Menlo as a partner for this transaction is because it is backed by Vista Equity Partners, Neuberger Berman, General Catalyst, American Express Ventures, Ericsson Ventures, HSBC, and JPMorgan Chase. The financial strength of its backers, and the fact that some were also Votiro's customers, made Menlo an obvious choice for the growth and development of the Votiro business moving forward."

He also highlighted the longstanding relationship between Votiro and Menlo, stating that it has been productive and beneficial, with technological synergies and shared large customers. "Votiro has also had a very productive commercial relationship with Menlo for some years, and Votiro's technology fits seamlessly into the Menlo portfolio. There are key synergies between Menlo and Votiro, including a number of large customers that we have in common. We continue to believe in the long-term outlook for Votiro's business, and Senetas's indirect investment in Menlo will provide Senetas and its shareholders with an ongoing exposure to future upside. We structured the sale to ensure that Senetas would receive what is expected to be a substantial incremental increase in the share consideration as Menlo grows its business."

Menlo Security's portfolio focuses on the provision of secure enterprise browser solutions, catering to over 1,000 global enterprises and government agencies, including some of the world's largest financial institutions and Global Fortune 500 companies. The acquisition is expected to enhance Menlo's market positioning in the cybersecurity space.

The sale reflects Senetas's strategy to leverage partnerships with established companies in the industry, with an eye on growth prospects both for its subsidiary and itself through alignment with high-calibre enterprises such as Menlo.