Cybersecurity startup Wiz has decided to remain independent and prepare for an initial public offering rather than accept a $23 billion acquisition offer from Alphabet Inc., Google’s parent company. Co-founder Assaf Rappaport detailed the decision in an internal memo, which CNBC later acquired. This potential deal was poised to be the largest ever for Google.
Investor and Regulatory Issues
Rappaport pointed to both investor apprehensions and likely antitrust complications as primary reasons for declining Alphabet’s proposal. Despite the proposed acquisition valuing Wiz at nearly double its $12 billion market valuation following a substantial $1 billion fundraising in May, the company’s focus remains on achieving $1 billion in annual recurring revenue before going public. This direction aligns with its broader strategic goals.
Wiz’s expertise lies in providing cloud security solutions for enterprises, making it an attractive target for Google as it competes with Microsoft and Amazon in this arena. An acquisition would have strengthened Google’s cybersecurity capabilities. However, mounting scrutiny from antitrust authorities complicates major mergers and acquisitions for substantial tech firms. These regulatory and investor considerations heavily influenced Wiz’s decision.
Google’s Antitrust Hurdles
While the deal appeared to be promising, there was a good chance of regulatory scrutiny, particularly given the current administration’s focus on antitrust laws. The Justice Department has previously taken legal action against Google regarding its search deal with Apple, and the Federal Trade Commission attempted to block Microsoft’s acquisition of Activision. These challenges could influence the deal’s finalization.
Since its inception in 2020, Wiz has shown robust growth under Rappaport’s guidance. The firm hit $100 million in annual recurring revenue in a mere 18 months, reaching $350 million last year. Wiz’s suite of cloud security products, encompassing proactive prevention and active threat detection, has drawn significant interest from large enterprises, positioning it as a critical player competitive to Microsoft’s security offerings.
Google’s Acquisition Track Record
Google’s most significant acquisition remains the 2012 purchase of Motorola Mobility for $12.5 billion. The company subsequently offloaded most of Motorola’s assets to Lenovo for $2.9 billion in 2014. More recently, Google terminated acquisition talks with sales software company HubSpot.
Last Updated on November 7, 2024 3:32 pm CET
