Cybersecurity firm Wiz has rejected a $23 billion takeover bid from Google’s parent company, Alphabet, opting instead for a stock market flotation. This deal would have been Alphabet’s largest acquisition to date.
Alphabet had been negotiating with Wiz, which was founded by former members of Israel’s cyberintelligence unit, as part of its strategy to compete with rivals Microsoft and Amazon in the competitive cloud services market. Wiz provides a service that scans data on cloud storage providers like Amazon Web Services and Microsoft Azure for security risks.
In an internal email to employees, Wiz stated, “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz.” CEO Assaf Rappaport outlined the company’s goals of reaching $1 billion in annual recurring revenue and pursuing an initial public offering (IPO).
“Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice,” Rappaport said. “The market validation we have experienced following this news only reinforces our goal – creating a platform that both security and development teams love.”
As of Tuesday morning, neither Wiz nor Google had released official statements about the termination of the deal talks. There has been skepticism about whether the deal would have passed regulatory scrutiny, as regulators are increasingly toughening their stance against big tech mergers and acquisitions.
Wiz’s decision to end the acquisition talks is a setback for Google, which has been heavily investing in its cloud infrastructure to attract more clients. Last year, Google’s cloud business generated over $33 billion in revenue. According to Bloomberg News, a recent global cyber outage caused by a faulty update from CrowdStrike influenced the breakdown of the deal, as it highlighted the increasing value of cloud cybersecurity firms like Wiz.
This development marks a second recent M&A disappointment for Alphabet, following its decision to abandon a deal with online marketing software company HubSpot. Wiz would have been Alphabet’s second major cybersecurity acquisition after its $5.4 billion purchase of Mandiant in 2022.
