Wiz pulls plug on $23b acquisition deal with Google, eyes IPO instead

Cybersecurity firm Wiz has called off a reported $23 billion acquisition deal with Google, a move that would have marked the tech giant’s largest-ever acquisition. This surprising decision was revealed in a memo issued by Wiz CEO Assaf Rappaport.

According to the memo, Wiz will now pivot its focus towards an initial public offering (IPO) as originally planned, with a target to achieve an annual recurring revenue of $1 billion. “Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice,” Rappaport remarked, referring to the acquisition offer.

While neither Alphabet (Google’s parent company) nor Wiz have officially acknowledged the deal talks, the Wiz memo did not specifically name Google or Alphabet. Google has yet to respond to Reuters’ request for comment, and Wiz has declined to comment further.

Earlier this month, Reuters reported that Alphabet was in advanced stages of negotiations to acquire Wiz for approximately $23 billion, citing a source familiar with the matter. This valuation is almost double what Wiz had announced in May, when it raised $1 billion in a private funding round at a $12 billion valuation.

Wiz specializes in cloud-based cybersecurity solutions, leveraging artificial intelligence to help companies identify and mitigate critical risks on cloud platforms.

The decision to cancel the deal represents a significant setback for Google, which has been heavily investing in its cloud infrastructure and aiming to attract more clients to its cloud business. Last year, Google’s cloud business generated over $33 billion in revenues.

This development marks the second recent blow for Alphabet in the mergers and acquisitions (M&A) arena. The company had previously walked away from a deal for online marketing software company HubSpot.

Had the deal gone through, Wiz would have become Alphabet’s second major acquisition in the cybersecurity sector, following its $5.4 billion purchase of Mandiant in 2022.

As Wiz moves forward with its IPO plans, the cybersecurity firm remains optimistic about its growth trajectory. The decision to remain independent underscores the confidence Rappaport and his team have in their ability to scale and succeed in a competitive market.

For Google, the fallout from this deal serves as a reminder of the complexities and unpredictabilities inherent in high-stakes corporate acquisitions. Despite this setback, the tech giant is expected to continue its aggressive push to expand its cloud services and enhance its cybersecurity capabilities.