Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, is in advanced talks to acquire cybersecurity startup Wiz for about $23 billion, the Wall Street Journal reported Sunday, citing people familiar with the matter. If the deal is finalized, it will be the company’s largest ever acquisition.
The news comes days after reports surfaced that Alphabet has decided not to pursue an acquisition of HubSpot (NYSE: NYSE:HUBS), a company with a market cap of over $24 billion. Antitrust scrutiny was said to have played a part in the company’s decision not to acquire HubSpot.
Wiz posted annual recurring revenue of $350 million in 2023, up from $100 million in its first 18 months after its founding in 2020 by CEO Assaf Rappaport.
The company raised $1 billion earlier this year at a valuation of $12 billion, suggesting the takeover is nearly double from those levels. Wiz is backed by venture capitalists, including Sequoia Capital, Andreessen Horowitz, Index Ventures, and Lightspeed Venture Partners.
Wiz was one of the rare startups outside of AI to raise capital at a higher valuation in 2024. Many startups are suffering from a tech boom hangover fueled by the low-interest rate environment.
If a deal is completed, it would be nearly double the value of Google’s largest deal to date, a $12.5 billion takeover of Motorola Mobility in 2012. Meanwhile, its second-largest acquisition to date was a $5.4 billion purchase of another security company, Mandiant.
Commenting on the possible deal, Wedbush analysts said this would be a "shot across the bow at Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN)."
"For Google this would be a shot across the bow at Microsoft and Amazon making a major bet on the cyber security space to complement its flagship GCP offering in the cloud," the Wedbush analyst stated. "This would give Google an edge on a number of cloud deployments and further monetize the cyber security cloud space with still less than 50% of the workloads not on the cloud globally."