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Google parent Alphabet has agreed to buy cyber security start-up Wiz for $32bn, sealing the search engine’s record acquisition less than a year after initial takeover talks between the companies collapsed.
The all-cash deal was announced on Tuesday just days after the companies revived talks that foundered last year amid fears the transaction could be blocked by antitrust regulators.
As part of the deal, Alphabet has agreed to pay employees of Wiz, which was founded in 2020 by alumni of Israel’s elite cyber intelligence unit 8200, a $1bn retention bonus, according to people familiar with the matter.
Alphabet chief executive Sundar Pichai is betting that the acquisition will drive growth at its cloud business, which competes with Amazon’s AWS, Microsoft’s Azure and Oracle.
“Google Cloud and Wiz will turbocharge improved cloud security and the ability to use multiple clouds,” Pichai said.
But the deal, the biggest M&A transaction so far this year, is expected to still face scrutiny from the Federal Trade Commission after its new chair, Andrew Ferguson, kept guidelines from his predecessor Lina Khan that give the agency the ability to block large mergers.
Alphabet is also paying far more than the $23bn price tag the companies discussed last year, and more than double the $12bn valuation it achieved in a 2022 fundraising round led by Andreessen Horowitz, Lightspeed Venture Partners and Thrive Capital.
After the talks with Alphabet collapsed last summer, Wiz said it would pursue an initial public offering.
Wiz is one of the fastest-growing software start-ups on record, as it has benefited from businesses shifting their operations to the cloud, where it provides cyber security services.
“This acquisition will bolster our mission to improve security and prevent breaches by providing additional resources and deep AI expertise,” said Assaf Rappaport, the group’s chief executive.
According to a person familiar with the matter, Wiz currently generates about $700mn of annualised recurring revenue, an earnings metric commonly used by start-ups. The figure is up from $500mn last year and co-founder Roy Reznik has set a target of $1bn for 2025.
The takeover comes after steep declines in US stocks and Donald Trump’s trade war have stymied an anticipated recovery in dealmaking.
Dealmakers have also feared that large tech takeovers may be particularly challenging under the Trump administration, with vice-president JD Vance saying that Big Tech has “too much power”.
The takeover of Wiz would be far larger than any of Alphabet’s previous deals. The company’s biggest deal to date was its $12.5bn acquisition of gadget maker Motorola Mobility, which it has since sold. In 2022, Alphabet paid $5.4bn to acquire cyber security company Mandiant to enhance its Google Cloud product.
Alphabet has been searching for ways to boost its earnings from cloud computing services to offset its dependence on search-linked advertising revenue. Google Cloud remains a distant third in global market share at about 12 per cent, behind Microsoft’s Azure with 21 per cent and Amazon’s AWS with almost a third.