Google to Acquire Wiz? Acquisition Talks Resume at Higher Valuation

Google's Pursuit of Wiz: A Renewed Acquisition Attempt

Breaking News: The acquisition has been finalized for $32 billion, paid in cash. Further details can be found here.

Alphabet, the parent organization of Google, is reportedly engaged in advanced discussions to acquire Wiz, a cloud cybersecurity firm. A source with knowledge of the negotiations confirmed this information to TechCrunch.

Previous Negotiations and Current Valuation

Discussions between the two companies reached a critical stage last year, nearing an agreement at a $23 billion valuation. However, the deal ultimately did not come to fruition.

The current discussions involve a higher valuation. Reports from The Wall Street Journal indicate a potential price point of approximately $30 billion.

Leadership and Strategic Alignment

Thomas Kurian, who leads Google’s cloud division, is once again spearheading the acquisition efforts.

Google Cloud views Wiz’s security offerings as highly complementary to its existing customer base. Furthermore, Wiz’s strong annual recurring revenue (ARR) is a significant draw.

Wiz's Financial Performance

As of last July, Wiz had achieved an ARR of $500 million, with projections to reach $1 billion by 2025, as previously reported by TechCrunch.

A $30 billion price tag would represent a substantial premium. Wiz’s most recent external funding round, a $1 billion raise, valued the company at $12 billion last May.

An employee tender offer late last year reportedly increased Wiz’s valuation to $16 billion.

Potential IPO and CFO Appointment

While Wiz had previously indicated no immediate plans for an initial public offering (IPO) in 2025, the company recently appointed Fazal Merchant, formerly of DreamWorks and Tanium, as its chief financial officer.

The hiring of a CFO often signals preparation for a potential public offering.

Past Obstacles to the Deal

A key factor in the previous breakdown of negotiations was disagreement regarding Wiz’s operational structure post-acquisition. Specifically, the companies could not reach consensus on whether Wiz would operate as an independent division or be fully integrated into Google Cloud, according to The Wall Street Journal.

Increased regulatory scrutiny of large-scale transactions under the Biden administration also contributed to the deal's failure last summer, the source revealed.

Increased M&A Activity

Industry observers have noted a rise in mergers and acquisitions (M&A) activity. This resurgence is linked to expectations that FTC Chair Andrew Ferguson may adopt a less restrictive approach to large transactions compared to his predecessor, Lina Khan, a source familiar with ongoing negotiations stated.

Wiz's Origins and Backers

Founded in 2020, Wiz is headquartered in New York and Israel. The company was established by four former Israeli military officers who had previously co-founded Adallom, a cloud cybersecurity company acquired by Microsoft for $320 million.

Wiz has secured backing from prominent venture capital firms including Andreessen Horowitz, Cyberstarts, Index Ventures, Greenoaks, Insight Partners, and Sequoia.