Update, 18/3, 12:53 pm: Google’s largest acquisition has finally been completed with Wiz. Various sources reported the news to the Financial Times. An official message from Google or Wiz has not yet been issued.
Both parties seem to have agreed on the price and conditions for the acquisition of Wiz. Last year, negotiations came to an end when neither party could agree on whether Wiz would remain a separate business unit of Google or integrate with Google Cloud.
The discussion now seems to have been resolved, and the acquisition has been mutually agreed upon. In America, the acquisition must still be approved by the regulatory authorities. The current FTC chairman, Andrew Ferguson, is said to once again create a more favourable climate for large acquisitions. Under the Biden administration, such acquisitions were scrutinized.
Original, 18/3, 09:00 am: Alphabet, Google’s parent company, has resumed advanced acquisition talks with cloud security company Wiz. The tech giant has now increased its offer to $30 billion.
Alphabet has once again engaged in discussions with cybersecurity company Wiz regarding a potential acquisition. Last summer, negotiations collapsed. Alphabet had $23 billion (about 21 billion euros) to offer. This year, the company has allocated a more substantial budget: $30 billion (almost 27.5 billion euros), according to The Wall Street Journal. Previously, Wiz had opted to pursue an IPO instead.
If this figure is accurate, the cloud security company stands to receive an enormous financial windfall. During its last funding round, Wiz was valued at $12 billion. This round extended through May, enabling Wiz to secure an additional $1 billion in funding. Later in 2024, the company’s valuation reportedly increased to $16 billion during an equity offering to employees. The amount Alphabet is now proposing would nearly double that valuation.
What does Google Cloud gain?
Thomas Kurian, who heads Google’s cloud division, is spearheading the negotiations as he did last summer. Google Cloud views Wiz’s cloud security capabilities as an excellent complement to its existing portfolio. Wiz has developed technology for real-time detection and response to cyber threats. By leveraging artificial intelligence, Wiz has rapidly attracted numerous high-profile clients, including competitors Amazon and Microsoft.
One key factor in the previous negotiations’ failure was disagreement over integration strategy: whether Wiz would operate as an independent division or be fully integrated into Google Cloud. According to The Wall Street Journal, the parties were unable to reach consensus on this matter.
Furthermore, Wiz’s annual recurring revenue (ARR) makes it particularly attractive. For context, this figure reached $500 million in July last year, with projections to hit $1 billion by 2025.
Changed regulatory environment
Another significant factor that contributed to the deal’s collapse last summer was the strict regulatory framework governing large transactions during the Biden administration. According to the deal source, there is now optimism that FTC Chairman Andrew Ferguson will take a less restrictive approach to major transactions than his predecessor Lina Khan.
Wiz has not yet issued a statement regarding these developments.
Also read: Fast-growing cybersec outfit Wiz to set up European HQ in London