- IronNet is transforming cybersecurity through Collective Defense, a differentiated platform that uses AI-driven behavioral analytics to detect new, non-signature-based cyberattacks, such as SolarWinds/SUNBURST.
- IronNet’s unique cloud-based, scalable solution, IronDome, analyzes threat detections across companies within an industrial sector to identify broad attack patterns and provides anonymized intelligence back to all customers in real time.
- This transaction is expected to drive further market adoption of IronNet’s Collective Defense Platform in a growing $25B security segment and accelerate its innovation-pipeline of additional offerings.
- Pro Forma enterprise value of the combined company following the merger is expected to be $927 million, implying a $1.2 billion pro forma equity value.
- Transaction includes a $125 million fully-committed common stock PIPE at $10.00 per share anchored by one of the world’s largest institutional investors with participation from Emles Advisors, Weiss Asset Management, and The Phoenix Insurance Company. Existing IronNet investors Bridgewater Associates, ForgePoint Capital, and Kleiner Perkins will be joined by the LGL sponsor group to also invest in the PIPE, enhancing their long-term commitment to IronNet.
IronNet Cybersecurity, Inc. (“IronNet”), an innovative leader transforming cybersecurity through Collective Defense, announced today that it has signed a definitive business combination agreement with LGL Systems Acquisition Corp. (NYSE: DFNS), a special purpose acquisition company formed to help advance domestic and international defense. The transaction will allow IronNet to accelerate its growth trajectory in the rapidly growing cybersecurity market and to capitalize on strong demand for new and more effective ways to defend against growing cyber threats. Upon close of the transaction, the combined company will be renamed “IronNet Cybersecurity, Inc.” and will be listed on the New York Stock Exchange and trade under the ticker symbol “IRNT.”
IronNet merges industry-leading cybersecurity products with expert service to create a platform designed to deliver the most advanced, real-time cyber defense globally, protecting both private and public sectors. Bringing together some of the best minds in cybersecurity from industry, government and academia, IronNet was created to more effectively defend enterprises, sectors and nations against highly organized cyber adversaries and increasingly sophisticated attacks that traditional security tools are challenged to detect. IronNet’s Collective Defense platform, which features proprietary and patented technology, detects cyber anomalies and shares anonymized threat data in real time within a secure ecosystem. This provides all Collective Defense members with a previously unachievable level of visibility into potential incoming threats.
“Today marks an important milestone as we work to advance IronNet’s ability to defend enterprises, sectors and nations against highly organized cyber adversaries and increasingly sophisticated attacks. We face the beginning of a digital arms race in which adversaries are using cybersecurity attacks as a tool to wreak havoc, including destruction, intelligence-gathering, and extortion – ultimately presenting an existential economic threat to the public and private sectors. Compounding this problem, organizations frequently must defend themselves, often with limited resources, against well-funded nation state groups who plan, code and attack in teams over long periods of time,” said GEN (Ret) Keith Alexander, Chairman of the Board, Founder and Co-CEO of IronNet.
“Cybersecurity attacks are increasing in volume and are costing global industries billions of dollars annually, as evidenced by the recent global attacks via SolarWinds and Microsoft software. Sophisticated threat actors routinely target private companies’ networks with increasingly swift and complex tactics. Supply chain and zero-day exploits are now part of the everyday business lexicon, and ransomware attacks are targeting life safety critical infrastructure. We believe we can solve that problem with a differentiated solution that leverages AI-driven behavioral analytics to detect attacks and shares that threat data among our customers in real time so they can take action more quickly,” added William Welch, Co-CEO of IronNet.
“IronNet is unparalleled in its approach to cybersecurity, providing best in class technology applications, critical data, and an experienced management team,” said Robert LaPenta, Co- CEO of LGL Systems Acquisition Corp. “As it stands today, current methods of cyber information sharing, analysis, and collective action are simply too manual and too slow to be effective. Our LGL team is very excited to partner with General (Ret.) Alexander, the longest-serving head of the NSA and founder of US Cyber Command, in helping steward his corporate vision to the New York Stock Exchange. We believe this merger will make a real difference in helping IronNet protect our fellow citizens from accelerating aggression by an invisible enemy intent on hurting our well-being.”
IronNet’s Collective Defense Platform consists of IronDefense and IronDome. IronDefense is an advanced Network Detection and Response (NDR) solution that provides behavior-based and AI-driven analytics at the network level to detect anomalous activity at individual enterprises and prioritize the highest threats in a company’s network. The IronDome solution then provides a crowdsource-like environment in which the IronDefense findings from an individual company are automatically and anonymously shared at machine network speed and cloud scale within the group of related entities (portfolio companies, supply chains, industries, or nations) for correlation and further analysis. This real-time visibility to the threat landscape delivers timely, actionable, and contextual insights to the attacks targeting an enterprise and provides early warning to all members.
In addition, IronNet’s professional cybersecurity services, are led by security professionals and threat researchers who have real-world experience with nation-state cyber operations. These customer engagements deliver end-to-end security posture evaluations that enable a customer’s security team to exercise their processes and technologies against a sophisticated but benign adversary, identify new and novel threats in their networks, and discover potential gaps.
IronNet believes that Collective Defense is the future of cybersecurity and takes threat intelligence sharing to an operational level. This one-of-a-kind platform represents a radically different approach to cybersecurity, designed to break down the silos that have made organizations around the world vulnerable to destructive cyberattacks.
Transaction Overview
LGL Systems Acquisition Corp., which currently holds approximately $173 million cash in trust, will combine with IronNet at an estimated pro forma total enterprise value of $927 million. Assuming no redemptions by LGL’s existing public stockholders, IronNet’s existing stockholders will hold approximately 72% of the fully diluted shares of common stock in the combined company, IronNet Cybersecurity, immediately following the closing of the business combination.
The combined company expects to receive approximately $267 million in net proceeds, assuming no redemptions by LGL’s existing public stockholders, including proceeds from a $125 million PIPE transaction. Cash proceeds are expected to be used to accelerate IronNet’s revenue growth, to expand its product portfolio, and for working capital to fund increasing demand.
The transaction has been unanimously approved by the board of directors of both LGL and IronNet, and is subject to the satisfaction of customary closing conditions, including the approval of both parties’ stockholders, expiration of Hart-Scott-Rodino waiting periods and the effectiveness of LGL’s registration statement with the Securities and Exchange Commission (SEC). The transaction is expected to close in the third quarter of 2021.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K and in LGL’s registration statement on form S-4, which will include a document that serves as a prospectus and proxy statement of LGL, referred to as a proxy statement/prospectus, each of which will be filed by LGL with SEC and available at www.sec.gov.
Advisors
Guggenheim Securities, LLC is acting as exclusive financial advisor and capital markets advisor to IronNet. Barclays is acting as exclusive financial advisor to LGL. Barclays, BTIG, LLC, Jefferies LLC and Needham & Company, LLC are acting as placement agents and capital markets advisors to LGL. Cooley LLP is acting as legal counsel to IronNet. Paul Hastings LLP is acting as legal counsel to LGL. Sidley Austin LLP is acting as legal counsel to the placement agents.
Investor Call / Management Presentation
A presentation made by the management team of both IronNet and LGL regarding the transaction will be available today starting at 7:00 AM EST on the website of LGL. To access the conference call, please visit www.dfns.ai or dial 1-844-512-2921 (international 1-412-317-6671) and enter password 1143965. LGL will also file the presentation with the SEC in a Current Report on Form 8-K, which will be accessible at www.sec.gov.
