Executives and lawyers of private equity firm Thoma Bravo LLC and ForgeRock Inc. met with top Justice Department antitrust officials Friday in an effort to persuade them not to block their proposed $2.3 billion deal, according to people familiar with the meeting.
(Bloomberg) — Executives and lawyers of private equity firm Thoma Bravo LLC and ForgeRock Inc. met with top Justice Department antitrust officials Friday in an effort to persuade them not to block their proposed $2.3 billion deal, according to people familiar with the meeting.
The companies met with Assistant Attorney General Jonathan Kanter, who will make the final call on whether to file a suit, said three people who were familiar with details of the meeting. Such “last rites” meetings are often one of the last steps before either a lawsuit or a settlement are filed.
Kanter hasn’t yet made a decision according to one of the people, who asked not to be named discussing confidential information. The Justice Department agreed to continue discussions with the companies over the next week, the person said.
Antitrust enforcers are concerned the deal would harm the market for identity management software since Thoma Bravo already owns one of ForgeRock’s main competitors – Ping Identity Holding Corp. The private equity firm also bought a related company, SailPoint Technologies Holdings Inc., last year, though the product differs from what Ping and ForgeRock offer. Thoma Bravo was previously a majority investor in Delinea Inc., but sold its stake to TPG Capital LP in 2021.
ForgeRock said in a statement Friday it’s committed to closing the transaction and noted that “digital identity is a very competitive market and customers and other organizations have many choices when designing their identity and access management systems.”
A Justice Department spokeswoman and Thoma Bravo declined to comment.
In public comments before the deal was announced, ForgeRock’s Chief Executive Officer said his company most frequently competes for business with Ping and Okta Inc. Before its own acquisition by Thoma Bravo, Ping also highlighted its competition with ForgeRock.
Last year, Microsoft Corp. announced it was revamping some of its cybersecurity products into a new suite of products focused on identity management, rebranding them Entra. Earlier this week, the company rolled out two new products. Those developments could complicate a potential Justice Department suit, the people said.
The Biden administration has taken an aggressive stance on mergers and acquisitions, with the Justice Department suing to block nine deals over the past two years. Another 15 deals have been called off after the agency sued or the DOJ notified companies that it planned to sue. The agency has a mixed record of success with litigation, having won two trials and settling a third after a string of three losses in a row. The Justice Department will head to trial in October seeking to block JetBlue Airways Corp.’s purchase of Spirit Airlines Inc.
Antitrust enforcers have also taken a closer look at private equity, particularly “roll-ups,” in which a firm makes an initial acquisition and proceeds to acquire numerous businesses in the same sector.
Thoma Bravo has already been impacted by the greater scrutiny, losing out to Silver Lake Management in its bid to buy Qualtrics International Inc. because of antitrust concerns, Bloomberg earlier reported. Justice Department concerns also led employees of the private equity firm to step down from the boards of two private companies amid an agency initiative focused on so-called interlocking directorates. Federal antitrust law forbids individuals or entities from sitting on the board of directors for two companies that directly compete with one another.
“In many cases, sellers do not want to go through that exploratory process of waiting a year to see if the deal will close,” Thoma Bravo founder Orlando Bravo said in a CNBC interview in May. “It’s taking a lot longer and people have to be a lot more thoughtful about what they’re engaging in.”
Politico earlier reported the DOJ meeting was scheduled for Friday.
(Updates to add Thoma Bravo comment in sixth paragraph. An earlier version of this story was corrected to say that Thoma Bravo sold its stake in Delinea to TPG in 2021.)
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