Google Reignites Acquisition Talks for Wiz with Increased Valuation
Alphabet, the parent company of Google, is currently in advanced negotiations to acquire the cloud cybersecurity startup Wiz. This acquisition could significantly enhance Google Cloud’s offerings, especially in the realm of cloud security.
Background on the Acquisition Talks
Last summer, the two companies were close to finalizing a deal, which was valued at approximately $23 billion. However, the transaction did not come to fruition. According to sources, the current discussions indicate a higher valuation, with reports suggesting a figure around $30 billion as noted by The Wall Street Journal.
Leadership and Strategic Fit
Leading this acquisition effort is Thomas Kurian, the head of Google Cloud. The integration of Wiz’s cloud security products is seen as a beneficial alignment with Google Cloud’s existing customer base. Notably, Wiz has an impressive annual recurring revenue (ARR) of $500 million, with ambitions to reach $1 billion in ARR by 2025, as reported by TechCrunch.
Valuation Insights
Despite the attractive revenue figures, a $30 billion price tag would represent a significant premium. Wiz’s last funding round in May valued the company at $12 billion, with an increase to $16 billion following an employee tender offer late last year.
Future Plans and Considerations
Although Wiz has stated it does not plan to go public by 2025, the hiring of Fazal Merchant as CFO—previously with Dreamworks and Tanium—may suggest preparations for a future public offering.
Challenges in Previous Negotiations
One of the hurdles in past negotiations was the disagreement over Wiz’s operational structure. There was uncertainty whether Wiz would function as an independent entity or be absorbed into Google Cloud. Additionally, regulatory scrutiny under the Biden administration posed challenges for large transactions, contributing to the breakdown of the earlier deal.
Market Activity and Future Trends
According to industry insiders, there has been a noticeable uptick in merger and acquisition activity. This shift is partly influenced by expectations that FTC Chair Andrew Ferguson may adopt a less restrictive approach compared to the previous chair, Lina Khan.
Founded in 2020 by four former Israeli military officers, Wiz has gained significant recognition in the cybersecurity space. The company is backed by notable investors, including Andreessen Horowitz, Cyberstarts, Index Ventures, Insight Partners, and Sequoia.
A spokesperson for Wiz has declined to comment on the ongoing discussions regarding the acquisition.
