Arbs earn about 3% a year to wait out Proofpoint's $6.3 billion Varonis buyout

Proofpoint, the Thoma Bravo-owned security vendor, agreed on October 15, 2026, to buy Varonis, the data-security software maker, for $49.75 a share in cash, a transaction worth about $6.3 billion, with the Varonis▼−0.08% — Varonis, down 0.08 percent today board approving unanimously ¹. Close is expected in the first half of 2027, subject to shareholder and regulatory approvals ¹.

Thoma Bravo committed the equity and secured debt financing, and Ontario Teachers' Pension Plan agreed to invest into Proofpoint alongside ¹. Proofpoint is paying 8.4 times trailing revenue and 53 times trailing free cash flow for a company whose second-quarter revenue grew 18.3% to $180.02 million, with adjusted earnings of $0.04 a share beating the $0.01 consensus ¹².

The premium math exposes the leak. $49.75 is 52% above the $32.71 close on June 22, the last day before the first sale rumors, but only 17% above the $42.35 close on September 1, the day before "additional media reports speculating about a potential sale" ¹. The stock added just 2.5% in after-hours trading when the agreement surfaced on October 15 ⁴. The deal was priced before most of the public could act on it.

The spread

Varonis closed at $48.89 on October 22, the day it told noteholders about the merger↗ ³, and traded at $48.82 by October 29, 93 cents under the cash price ⁴. That is a 1.9% gross spread; with closing roughly eight months out at the back edge of the guided window, the annualized return works out to about 2.9% ⁴. Short interest sits at 5.51% ⁴. Waiting through a shareholder vote and regulatory clearances for under 3% a year is pocket change, not payment ⁴.

Noteholders get paid only on closing

A October 22 notice to holders of the 1.00% convertible senior notes due 2029↗ says the merger will constitute a Fundamental Change, a Make-Whole Fundamental Change and a Corporate Event "as of the Effective Time," and that if the merger "is not consummated for any reason, then none" of the three events will have occurred ⁵. In plain terms, the make-whole protection pays only on closing. The note spread and the equity spread carry the same condition: no close, no pay.

The two camps on price

Halper Sadeh LLC, an investor rights law firm, is investigating whether the board obtained the best possible price↗, ran a fair process and disclosed everything shareholders need ⁶. Wohl & Fruchter is questioning the price against the stock's 52-week high of $63.80 ³.

The board's answer is on the record: an independent committee ran "extensive outreach to a range of potential strategic and financial buyers," and CEO Yaki Faitelson called the price "immediate, significant, and certain value well in excess of the risk-adjusted value" of the standalone plan ¹.

The category reprices while the deal waits

CyeraPVT~$3B — Cyera, private, latest valuation ~$3B, the private company selling data security for the AI age in the same category as Varonis, added a $400 million Goldman Sachs extension to its Series G↗ on September 22, on top of a $600 million round led by Evolution Equity Partners in June ⁷⁸. Six outlets reported this week that Cyera is in talks at a $20 billion valuation, a figure no company filing confirms ⁸.

Proofpoint is locking the category's public benchmark at 8.4 times revenue while its closest private rival asks for 67% more than the $12 billion mark Goldman▼−4.59% — Goldman, down 4.59 percent today underwrote a month earlier ¹⁷⁸. Every dollar of credibility the Cyera ask gains is a dollar of ammunition for the firms arguing $49.75 is light ¹⁷⁸. The Inference followed the money into Cyera when Goldman wired its check in September; this week's reported repricing is what is new.

What decides it from here

Varonis reports third-quarter results after the close on November 3, with no earnings call because of the pending deal ¹. The proxy for the special meeting has not been filed yet ⁵. Three readings set the spread from here: the Q3 print, the litigation disclosures in the proxy, and whether Cyera's talks close anywhere near $20 billion ⁸. If the category re-rates, the $49.75 print ages badly and the litigants gain leverage ⁸. If the Cyera talks die, the deal closes as signed and arbs keep their 3% ⁸.