Kaseya has unveiled plans to acquire Datto in a US$6.2 billion deal funded by private equity as the managed service provider (MSP) market enters a fresh round of consolidation.
The all-cash transaction -- which is expected to close in the second half of 2022 subject to customary closing conditions -- will be funded by an equity consortium led by Insight Partners, backed by "significant investment" from TPG Capital and Temasek, and participation from Sixth Street.
Terms of the agreement will see Datto stockholders receive $35.50 per share and represents a 52 per cent premium to the company’s stock price of $23.37 as of 16 March.
“This is exciting news for Kaseya’s global customers, who can expect to see more functional, innovative and integrated solutions as a result of the purchase,” said Fred Voccola, CEO of Kaseya. “Datto has a legendary commitment to its customers and employees. The alignment of our missions and focus makes us a natural fit, that will help our greatly appreciated customers reach new levels of success.”
According to Voccola, the companies will operate “completely independently” until the transaction has been finalised.
“Kaseya is known for our outstanding track record of retaining the brands and cultures of the companies we acquire and supercharging product quality,” he added. “We couldn’t be more excited about what lies before us - Kaseya and Datto will be better together to serve our customers.”
The move comes less than three months after Datto acquired threat detection and response vendor Infocyte, extending security capabilities across endpoint and cloud environments. This is in addition to buying out BitDam in March 2021, which operates as an Israel-based cyber threat detection specialist.
“Datto has always been committed to creating world-class technology for SMBs and delivering it through our global network of MSPs to align our growth with the channel,” said Tim Weller, CEO of Datto. “Combining with Kaseya brings together a broader array of technology products to create additional opportunities for MSPs.
“I’m encouraged by the continued investment in the rapidly-expanding global MSP community, and this transaction is another important validation of the channel.”
In October 2017, Datto and Autotask joined forces with the mega merger significantly shaking up the managed services market across the channel.
At the time, Datto was acquired by Vista Equity Partners -- an investment firm focused on software, data and technology-enabled businesses -- and operated under the same roof as Autotask, which was owned by Vista since June 2014, combining back-up and disaster recovery solutions with IT service management capabilities.
Fast forward to January 2019 and Datto then appointed Weller as new CEO -- replacing founder Austin McChord who transitioned away from the day-to-day management of the company in late 2018 -- before listing on the New York Stock Exchange (NYSE) in October 2020.
“At Insight Partners, we work with IT infrastructure technology leaders who define and grow their markets through world-class software, data and innovation,” said Michael Triplett, managing director at Insight Partners.
“We are excited to continue to support Kaseya, an industry-defining IT and security infrastructure management company, as they deepen their support for the industry and enhance the experience of their customers.”
Meanwhile in July 2021, thousands of businesses from around the world were impacted in a supply-chain attack where hackers exploited a vulnerability in Kaseya's remote computer management tool VSA to deploy the REvil ransomware.
Kaseya shut down its cloud-based service in response and urged all users with on-premises deployments -- which included many MSPs -- to immediately shut down vulnerable servers until a patch was released.
This was not the first time cyber criminals and ransomware gangs have targeted MSPs as an easy way to gain access into corporate networks. Defending against this attack vector is not easy for many organisations since outsourcing IT administration means giving MSPs highly privileged access into their networks and systems.