Google revives talks to acquire Wiz at higher valuation

Google revisits talks to acquire cybersecurity firm Wiz at $30 billion.

: Alphabet takes renewed interest in acquiring Wiz, led by Thomas Kurian. Discussions now consider a valuation of $30 billion, a rise from last year's bid of $23 billion. The valuation reflects Wiz’s goal of $1 billion ARR by 2025. Prior issues included integration concerns and regulatory scrutiny under the Biden administration.

Google's parent company, Alphabet, has reignited discussions to acquire Wiz, a cloud cybersecurity startup, for an estimated $30 billion. The two firms had nearly sealed a deal at a $23 billion valuation the previous summer, but the agreement did not come to fruition. Thomas Kurian, who heads Google's cloud division, spearheads the negotiations once more. The integration of Wiz into the Google Cloud portfolio is considered a strategic move due to its technological alignment with existing services.

The valuation of Wiz has significantly increased, showcasing its potential growth in the cybersecurity market. Last July, Wiz recorded an annual recurring revenue (ARR) of $500 million, with aspirations to reach $1 billion by 2025. Notably, Wiz's valuation spiked from $12 billion during its $1 billion fundraising round in May to $16 billion during a subsequent employee tender offer. Such figures underscore Wiz's substantial advancement trajectory, making the proposed $30 billion an ambitious yet plausible price.

The previous breakdown of talks was partly due to disputes over whether Wiz would function as an independent entity or merge with Google Cloud. Additionally, intense regulatory scrutiny under the Biden administration played a role in impeding the original deal. The Wall Street Journal introduced hopes that current regulatory leadership under FTC Chair Andrew Ferguson might adopt more lenient stances on transactions of this magnitude, contrasting with former Chair Lina Khan's more stringent oversight.

Wiz’s foundation story adds another layer to its current valuation. Established in 2020 by four ex-Israeli military officers, the startup’s heritage traces back to the founders' prior venture, Adallom, which Microsoft acquired for $320 million. Wiz boasts an impressive list of backers, including high-profile investors such as Andreessen Horowitz and Sequoia. These supporters validate the company’s credibility and appeal in the rapidly evolving cybersecurity space.

In preparation for potential public market entry or acquisition, Wiz has appointed Fazal Merchant, previously affiliated with DreamWorks and Tanium, as their chief financial officer. Often, the hiring of a CFO signifies preparations for transitioning a company into public offering readiness. Wiz has publicly stated that entering the public domain by 2025 is not currently in their strategic plan, which emphasizes the significance of the acquisition talks by Alphabet.

Sources: TechCrunch, The Wall Street Journal

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