Google’s US$23 Billion Plan to Acquire Cybersecurity Wiz Crumbles

Wiz has ended talks with Google’s parent company Alphabet on a proposed US$23 billion deal and will instead pursue an initial public offering (IPO) on the stock exchange, citing antitrust concerns and investor reservations as the primary reasons for this decision. 

On July 15, Reuters reported that Alphabet, Google's parent company, was in advanced negotiations to acquire Israeli cybersecurity startup Wiz for approximately US$23 billion. The acquisition was intended to bolster Google’s position in the cloud security market and would have been the largest purchase in the company's history. 

According to Reuters, the deal would have provided Alphabet with a robust customer base, innovative technology capabilities, and a significant enhancement to its cloud security services, helping Google Cloud compete more effectively with market leaders such as Microsoft and Amazon.

In response, Assaf Rappaport, CEO, Wiz, informed his employees about the decision to cancel the deal with Google. In a memo obtained by CNBC, Rappaport acknowledged the challenges of declining such a substantial offer and emphasized that the company will focus on its upcoming milestones: the IPO and achieving US$1 billion in annual recurring revenue. He later confirmed these goals in an interview with CNBC at the New York Stock Exchange.

The deal would have nearly doubled Wiz's valuation from US$12 billion, a significant increase given its most recent funding round. Founded in 2020, Wiz has experienced rapid growth under Rappaport's leadership, reaching US$100 million in annual recurring revenue within 18 months and US$350 million last year.

The technology sector has faced challenges with IPOs this year, as companies await more favorable market conditions and a less restrictive regulatory environment before considering acquisitions, CNBC notes.

Wiz’s founders, who previously created the security startup Adallom and sold it to Microsoft for US$320 million in 2015, have a proven track record in the sector. Eighteen months after its founding, Wiz raised US$100 million, a notable achievement that several investors consider remarkable.

Another factor contributing to the company's accelerated growth is its deployment during the Covid-19 pandemic. As companies increasingly migrated their data and applications from on-premises servers and data centers to the cloud to support remote work, Wiz secured major clients such as global bank Barclays and food conglomerate Mars.