US govt rumored to be considering suit to stop ForgeRock buyout
ForgeRock’s proposed buyout by private equity firm Thoma Bravo could fall victim to a newly invigorated anti-trust unit within the U.S. Justice Department.
Like a lot of private equity funds, Thoma Bravo has used its time well as corporate valuations have wilted. It has strategically bought public companies, taking them private on the cheap.
It bid $2.3 billion in cash for ID and access management vendor ForgeRock last fall, for example. That deal was due to close last month. And last August, Thoma Bravo paid $2.8 billion for publicly held enterprise digital ID firm – and ForgeRock rival — Ping Identity.
Unlike almost all other funds, however, Thoma Bravo has also attracted the attention of the Department of Justice.
Regulators are after illegal corporate consolidation – most visibly right now, interlocking directorates, which is when a board member of one company sits on a competitor’s board simultaneously. DOJ investigators found that some Thoma Bravo people were on the boards of three competitors outside the biometrics’ sector and they had to flee their seats.
Justice Department officials are not going after Thoma Bravo for interlocking directorates in their reported investigation of the proposed ForgeRock deal (which has the approval of the ForgeRock board.)
Politico, one of Washington, D.C.’s, iconic publications, has reported that the department is likely to decide by July 26 if it will challenge Thoma Bravo’s purchase of ForgeRock in court. The sticking point is, in fact, the fund’s acquisition of Ping.
Politico gave its sources anonymity.
The two identity and access management firms’ products are too similar, making their acquisition by the same firm anti-competitive. As with the directorate cases, this would concentrate control of significant players that likely would harm buyers.