Rumors are again circulating that cybersecurity vendor Trend Micro is being eyed for acquisition, six months after August 2024 rumors that the company was potentially exploring a sale.
In recent weeks, at least three private equity firms expressed interest in acquiring the well-known Japanese-based cybersecurity firm, according to a February 12 story by Reuters. Bain Capital, Advent International and EQT AB are among the private equity firms sniffing around Trend Micro, the story reported, based on information from people who are familiar with the matter.
“The buyout firms have expressed interest in taking Trend Micro private in recent weeks, the sources said, requesting anonymity as the deliberations are confidential,” the story said. “KKR is also an interested party, two of the sources said, adding that a deal is not guaranteed and Trend Micro could choose to remain independent.”
Trend Micro declined to answer several questions about the reported acquisition talks when asked by ChannelE2E. “We aren’t able to comment on rumors and speculation,” a spokesperson said via email.
Last August, CRN Australia reported that Trend Micro was exploring a sale after attracting buyout interest, based on sources familiar with the situation at that time. That report said that Trend Micro was working with investment bankers to solicit interest from potential buyers, which include private equity firms.
The latest acquisition interest has fueled a surge in Trend Micro shares, according to Reuters.
Analyst Urges Caution for Trend Micro
The potential acquisition of Trend Micro raises concerns for at least one IT analyst who spoke with ChannelE2E about the report.
“Selling to private equity would be a disaster for Trend Micro, its employees, customers, and the industry,” Richard Stiennon, the chief research analyst for IT-Harvest, told ChannelE2E. “While Trend Micro has never been an exciting stock to own, it has been one of the stalwarts of the cybersecurity industry. One of the few companies that is founder-led, Trend Micro has weathered many shifts in the industry that have destroyed its major competitors like Symantec and McAfee.”
It was private equity deals that hurt those companies as “they were traded around and torn apart,” said Stiennon.
The latest acquisition rumors for the company are not a surprise, he said, because Trend Micro has traditionally been underpriced by the markets.
“At a 55% increase since the beginning of 2023, it did not participate in the rapid recovery as much as CrowdStrike (up 380%) or Palo Alto (up 198%),” said Stiennon. “So, it is cheap even after its current jump. While Trend must evaluate buyout offers, I fully expect [CEO and co-founder] Eva Chen to reject the very idea.”
If a private equity-led acquisition should happen, then MSPs and resellers will have some decisions to make, said Stiennon.
“MSPs and resellers that rely on Trend Micro's portfolio of endpoint and cloud products should be prepared for major disruptions,” he said. “The private equity playbook includes cost cutting, management changes, and making acquisitions to artificially boost growth numbers before dumping the company back on the market. Nothing good will come of this.”
Another analyst, Jack E. Gold, president and principal analyst of J.Gold Associates, LLC, told ChannelE2E that he is not surprised by the latest acquisition rumors.
“Trend Micro has mostly been an old-style antivirus company, although it has moved on to larger malware detection and prevention. But its core profitable business, enterprise device protection, has been changing. It still has a significant base of clients, but the growth it needs will require an AI focus as well as an XDR capability.”
By taking the company private, the private equity firms “hope they can take the Trend Micro product core and revive and perhaps merge with some other capabilities,” said Gold. “If it can then emerge as a viable larger competitor in the market, the private equity people could then do an IPO. Other competitors of Trend, like Symantec, have already been absorbed.”
Gold said many changes have come in the security market, especially in device security, over the past couple of years and will continue, “especially as Microsoft plays the security card and as AI-based products and services become the norm.”
At the same time, “enterprises are looking for a more holistic approach to security, and including a network-centric view of what detection and response can look like,” said Gold. “Big players in this space, like Cisco, Palo Alto, Zscaler, and others, are now competition for Trend Micro where in the past they were not.”
