Google faces setback as Wiz ends $23 billion acquisition talks

The halted deal showcases the growing regulatory hurdles for major tech companies in executing large acquisitions

NEW YORK:

Google parent company Alphabet has faced a setback as Israeli cybersecurity startup Wiz decided to end acquisition talks, which would have marked Alphabet’s largest-ever acquisition at a reported $23 billion. According to a memo seen by CNBC, Wiz CEO Assaf Rappaport stated that the company will now focus on its initial public offering (IPO) and aims to achieve $1 billion in annual recurring revenue.

"Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice," Rappaport wrote in the memo. The memo did not explicitly name Google or Alphabet, and neither company has officially acknowledged the deal discussions. Google did not respond to Reuters' request for comment, and Wiz declined to comment further.

Reuters had reported earlier that Alphabet was in advanced talks to buy Wiz for approximately $23 billion, a valuation nearly double what Wiz announced in May when it raised $1 billion in a private funding round at a $12 billion valuation. Wiz provides cloud-based cybersecurity solutions powered by artificial intelligence, helping companies identify and mitigate critical risks on cloud platforms.

Wiz's decision to halt the acquisition is a setback for Google, which has been heavily investing in its cloud infrastructure to compete with industry leaders like Microsoft and Amazon. Last year, Google's cloud business generated more than $33 billion in revenue. This development follows another recent disappointment for Alphabet in the M&A space, after it reportedly walked away from acquiring online marketing software company HubSpot. According to CNBC, both antitrust and investor concerns were cited as reasons for Wiz abandoning the deal.

Had the Wiz acquisition proceeded, it would have been Alphabet's second significant purchase in the cybersecurity sector, following its $5.4 billion acquisition of Mandiant in 2022. Wiz offers cloud-based security solutions for enterprise customers, an attractive target that could have placed Google in a better position to compete with industry leaders Microsoft and Amazon.

The termination of talks with Wiz underscores the complexities and regulatory scrutiny faced by major tech companies in executing large-scale acquisitions. According to reports antitrust regulators have increasingly fixated on deals made by Big Tech in recent years.