If the Merger is consummated, at the effective time of the Merger (the “Effective Time”), each share of Varonis common stock issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive $ 49.75 in cash, without interest, other than certain excluded shares, including restricted shares, shares held in treasury or owned by Parent, Merger Sub or any subsidiary of the Company and shares for which appraisal rights have been properly demanded under Delaware law.
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The Merger is expected to close in the first half of 2027, subject to the satisfaction of customary closing conditions, including, but not limited to (i) approval by the holders of at least a majority in voting power of the outstanding Company shares entitled to vote thereon, (ii) the absence of any governmental entity issuing any order or other legal restraint that makes consummation of the Merger illegal or otherwise prohibited, (iii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iv) the clearance or approval under certain specified foreign regulatory laws and (v) the absence of any Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement. The obligation of each party to consummate the Merger is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement. The obligations of Parent and Merger Sub to consummate the Merger are not subject to any financing condition.
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The Merger Agreement generally requires the Company to operate its business in the ordinary course in all material respects, subject to customary exceptions, pending consummation of the Merger, and contains customary interim operating covenants that restrict the Company from taking certain specified actions without Parent's consent until the Merger is consummated or the Merger Agreement is terminated in accordance with its terms.
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The Merger Agreement contains certain termination rights for the Company and Parent, including that, subject to certain limitations, either party may terminate the Merger Agreement (i) if the Merger is not consummated by 11:59 p.m. New York time on July 15, 2027, subject to an automatic three-month extension under specified circumstances relating to required regulatory approvals, (ii) if any order prohibiting the Merger has become final and non-appealable or (iii) if the Company’s stockholders do not approve the adoption of the Merger Agreement at the stockholders’ meeting held for that purpose. In addition, subject to certain conditions and prior to receipt of Company stockholder approval, Parent may terminate the Merger Agreement if the Board adversely changes its recommendation in favor of the Merger, and the Company may terminate the Merger Agreement to enter into a definitive agreement providing for a superior proposal. The Company and Parent may also terminate the Merger Agreement by mutual written consent.
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The Company is subject to customary restrictions on its ability to solicit alternative acquisition proposals from third parties and to provide non-public information to, and participate in discussions and engage in negotiations with, third parties regarding alternative acquisition proposals, subject to customary exceptions. If the Merger Agreement is terminated under certain specified circumstances, including, among other circumstances: (A) if the Company terminates the Merger Agreement in order to enter into an agreement providing for a superior proposal or Parent terminates the Merger Agreement because the Board adversely changes its recommendation in favor of the Merger, the Company would be required to pay Parent a termination fee of $ 211,700 and (B) if Parent fails to consummate the Merger following satisfaction or waiver of certain closing conditions and the Company’s irrevocable confirmation that it is ready, willing and able to consummate the closing, or if the Company terminates the Merger Agreement due to Parent’s breach of its obligations under the Merger Agreement, which breach gives rise to a failure of certain conditions to the Merger and which Parent fails to cure, Parent would be required to pay the Company a reverse termination fee of $ 423,300.
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Parent has obtained equity financing commitments from funds managed by Thoma Bravo and debt financing commitments from certain financial institutions for the purpose of financing the transactions contemplated by the Merger Agreement and paying related fees and expenses. The Company is a third-party beneficiary under certain provisions of the equity commitment letter.
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If the Merger is consummated, the Company shares will be delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934, as amended. The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement which is filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the SEC on October 15, 2026.
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On August 21, 2026, the Company entered into an asset purchase agreement with an unrelated third party to acquire certain internal-use software assets delivered at closing and additional internal-use software assets to be delivered in the future. Total cash consideration attributable to the internal-use software assets is $ 17,810, of which $ 900 was paid at closing for assets delivered during the third quarter of 2026 and $ 16,910 is payable in 2027, subject to delivery and specified acceptance conditions for the remaining internal-use software assets, as well as potential adjustments for indemnity claims. Costs capitalized under the asset purchase agreement are recorded within intangible assets, net in the condensed consolidated balance sheets.
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the purported class period from the original complaint’s period of February 4, 2025 through October 28, 2025 to a period of February 4, 2025 through February 3, 2026 and adds additional alleged misrepresentations by defendants. The substantive allegations of the amended complaint remain substantially similar to the original complaint. On August 25, 2026, lead plaintiffs filed a motion to transfer the venue of this action from the Southern District of New York to the Southern District of Florida. The Company has opposed this motion to transfer and it remains pending before the court. The defendants still intend to file a motion to dismiss this action, which will be filed after the court’s decision on the motion to transfer venue. The Company believes the claims in this action are without merit and intends to defend the action vigorously. At this early stage of the proceedings, the Company can neither predict the ultimate outcome of the litigation nor estimate any range of possible losses but the Company believes the claims in this litigation are without merit and intends to defend the action vigorously.
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On October 15, 2026, we entered into the Merger Agreement with Parent, an affiliate of funds advised by Thoma Bravo, L.P., and Merger Sub. If the Merger is consummated, our stockholders will be entitled to receive $49.75 in cash, without interest, for each share of our common stock they hold as of immediately prior to the Effective Time of the Merger, other than certain excluded shares. The Merger is expected to close in the first half of 2027, subject to approval by our stockholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions. See "Merger Agreement" within Note 1 “General” of our condensed consolidated financial statements for information regarding the Merger.
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Provision for income taxes for the three months ended September 30, 2026, including the change in income taxes, were comprised of foreign and U.S. income taxes.
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On October 15, 2026, we entered into the Merger Agreement pursuant to which the Parent agreed to acquire us for $49.75 per share in an all-cash transaction. We have agreed to various covenants, including, among others, agreements to conduct our business in the ordinary course in all material respects during the period between the execution of the Merger Agreement and the Effective Time of the Merger. In addition, without the consent of the Parent, we may not take, authorize, agree or commit to do certain actions outside of the ordinary course of business, including incurring capital expenditures above specified thresholds, issuing additional equity securities, incurring indebtedness for borrowed money, and repurchasing shares of our outstanding common stock, in each case, outside of certain limited exceptions. If the Merger Agreement is terminated in certain circumstances, including: (A) by us in order to enter into a superior proposal or by Parent because the Board withdraws its recommendation in favor of the Merger, we would be required to pay Parent a termination fee of $211.7 million and (B) if Parent fails to consummate the Merger following satisfaction or waiver of certain closing conditions and our irrevocable confirmation that we are ready, willing and able to consummate the closing or terminated by us due to Parent’s breach of its obligations under the Merger Agreement, Parent would be required to pay us a reverse termination fee of $423.3 million. We do
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not believe these restrictions will prevent us from meeting our debt obligations, ongoing costs of operations, working capital needs or capital expenditure requirements.
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Risk Factors
• failure to complete, or delays in completing, the Merger could materially and adversely affect our business, financial condition, results of operations, and stock price;
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• uncertainty about the Merger may adversely affect relationships with our customers, partners, suppliers, and employees, whether or not the Merger is completed;
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Failure to complete, or delays in completing, the Merger could materially and adversely affect our business, financial condition, results of operations, and stock price.
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On October 15, 2026, we entered into the Merger Agreement with Parent and Merger Sub. Completion of the Merger is subject to approval by our stockholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions in the Merger Agreement. The parties to the Merger Agreement may not receive the necessary approvals for the transaction or receive them within the expected timeframe. In addition, the Merger may fail to close for other reasons, and either we or Parent may terminate the Merger Agreement if the Merger is not consummated by July 15, 2027, subject to an automatic three-month extension under specified circumstances relating to required regulatory approvals. If the proposed Merger is delayed or not completed, we are subject to a number of risks, including:
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• our management will have devoted significant attention and resources to the Merger;
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• we could be subject to litigation related to any failure to complete the Merger;
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• if the Merger Agreement is terminated, under some circumstances, we may be required to pay a termination fee of $211.7 million;
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• if the Merger Agreement is terminated under circumstances in which Parent is required to pay us a reverse termination fee of $423.3 million, such fee, together with certain limited expense reimbursement and enforcement costs, generally will be our sole and exclusive monetary remedy against Parent and its related parties and may not be sufficient to compensate us for our losses;
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• we will remain liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Merger regardless of whether the Merger is consummated;
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• the price of our common stock may decline, including to the extent that the current market price of our common stock reflects an assumption that the Merger and the other transactions contemplated by the Merger Agreement will be
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If any of these effects were to occur, it could adversely impact our business, results of operations, financial condition or cash flow, as well as the market price of our common stock and our perceived value, regardless of whether the Merger is completed.
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Uncertainty about the Merger may adversely affect relationships with our employees, customers, partners and suppliers, whether or not the Merger is completed.
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Uncertainty about the Merger and the effect of the Merger on customers, partners, suppliers, employees and other third parties who deal with us may have a material adverse effect on our business, results of operations, and financial condition. Such uncertainties may impair our ability to attract, retain, and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger, creating distractions and thus resulting in a decline in their productivity.
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These uncertainties could also lead current and prospective customers and partners to purchase products and services from other providers or delay purchasing from us, which could have a material adverse effect on our business, results of operations, financial condition, and market price of our common stock. The Merger may also generate negative publicity and a negative impression of us in the financial markets, and may lead to litigation against us and our directors and officers.
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The pursuit of the Merger may place a significant burden on management and internal resources, which may have a negative impact on our ongoing business. It may also divert management’s time and attention from the day-to-day operation of our remaining businesses and the execution of our other strategic initiatives. This could adversely affect our financial results.
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While the Merger is pending, we are subject to contractual restrictions and interim covenants that could harm our business relationships, financial condition, results of operations, and business.
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The Merger Agreement generally requires us to operate our business in the ordinary course in all material respects, subject to certain exceptions, pending consummation of the Merger, and subjects us to customary interim operating covenants that restrict us from taking certain specified actions without Parent's approval until the Merger is consummated or the Merger Agreement is terminated in accordance with its terms, including, among other things, issuing or repurchasing equity securities; incurring debt; entering into, establishing, adopting, amending, modifying or terminating any employee benefit plan or certain contracts; increasing the compensation or employee benefits of certain employees, contractors or service providers or hiring or terminating certain employees, contractors or service providers; settling, releasing, waiving or compromising certain legal proceedings; materially changing our methods, principles or practices of financial accounting; and incurring certain capital expenditures. These restrictions could prevent us from pursuing certain business opportunities that may arise prior to the consummation of the Merger and may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.
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The Merger Agreement contains provisions that limit our ability to pursue alternatives to the Merger.
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Under the Merger Agreement, we are restricted from soliciting or engaging in discussions or negotiations with respect to any alternative acquisition proposal, subject to customary fiduciary exceptions. In addition, under certain circumstances, including if we terminate the Merger Agreement to enter into an agreement providing for a superior proposal or if Parent terminates the Merger Agreement because our board of directors adversely changes its recommendation in favor of the Merger, we would be required to pay Parent a termination fee of $211.7 million. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of our business from considering or proposing an acquisition, even if such third party were prepared to pay consideration with a higher value than the value of the consideration provided for in the Merger Agreement.
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The Company and Parent have incurred, and expect to continue to incur, a number of non-recurring costs associated with the proposed Merger, a substantial majority of which will consist of transaction and regulatory costs.
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Lawsuits may be filed against us and the members of our board of directors arising out of the Merger, which may delay or prevent the Merger.
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Stockholder complaints and other complaints may be filed against us, our board of directors, Parent, Parent's board of directors, and others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, and we may not be successful in defending against any such claims. Such lawsuits could delay or prevent the Merger, divert the attention of our management and employees from our day-to-day business, result in substantial costs to us, and otherwise adversely affect our business, results of operations, and financial condition.
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requirements could result in additional costs, liability, reputational harm, inhibited sales, and other adverse effects on our business.
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suspension or debarment from government contracting, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
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Despite our efforts to protect our proprietary technology and trade secrets, unauthorized parties may attempt to misappropriate, reverse engineer or otherwise obtain and use them. In addition, others may independently discover our trade secrets, in which
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