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Alphabet to buy Wiz for US$32 billion

Alphabet to buy Wiz for US$32 billion

  • 18.03.2025 20:04
  • itnews.com.au
  • Keywords: Mergers & Acquisitions

Alphabet agreed to buy cybersecurity startup Wiz for $32 billion, marking its largest deal yet, to strengthen cloud security and compete with Amazon and Microsoft. The acquisition highlights Alphabet's focus on expanding its cloud services amid rising demand for secure solutions.

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Alphabet

Alphabet

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Analyst rating: Buy

Alphabet is acquiring Wiz to strengthen its cloud security offerings and compete with Amazon and Microsoft.

Wiz

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Analyst rating: N/A

Wiz is being acquired by Alphabet for US$32 billion, valuing the company at a high premium.

Context

Analysis of Alphabet's Acquisition of Wiz

Key Facts and Data Points

  • Deal Value: Alphabet agreed to buy Wiz for US$32 billion, marking its largest acquisition ever.
  • Breakup Fee: The deal includes a termination fee of over US$3.2 billion, one of the highest in M&A history.
  • Wiz's Valuation:
    • Privately valued at US$12 billion in May 2024.
    • Generated over US$500 million in annual recurring revenue as of mid-2024.
  • Deal Timeline: Expected to close in 2026, subject to regulatory approvals.

Market Trends and Business Impact

  • Cybersecurity Growth: The acquisition reflects increasing demand for cybersecurity solutions, driven by incidents like the CrowdStrike outage.
  • Cloud Security Race: Alphabet aims to strengthen its cloud security offerings to compete with Microsoft Azure and Amazon Web Services (AWS).
  • Strategic Expansion: Wiz's products will remain available on competing cloud platforms, addressing potential regulatory concerns.

Competitive Dynamics

  • Google Cloud Positioning: Google Cloud, a key driver of Alphabet's growth, generated over US$40 billion in revenue in 2024.
  • Enterprise Competition: The acquisition positions Alphabet to offer a deeper suite of security services, crucial for attracting enterprise customers.
  • Israel's Cybersecurity Industry: Wiz joins a list of Israeli-founded companies acquired by tech giants, including Siemplify and Own.

Regulatory Considerations

  • Antitrust Scrutiny: The deal may face heavy scrutiny due to Alphabet's historical M&A track record and ongoing antitrust issues.
  • Interoperability Concerns: Google emphasized that Wiz will continue working with competing cloud platforms to mitigate regulatory risks.
  • FTC and DOJ Focus: The FTC is investigating Microsoft's cloud business, while the DOJ is addressing Google's ad tech monopoly.

Financial Implications

  • Funding Requirements: Alphabet had US$23.47 billion in cash as of December 31, 2024, suggesting potential financing needs for the deal.
  • Investor Sentiment: The acquisition may face investor skepticism due to Alphabet's past M&A performance.

Long-Term Effects

  • Industry Impact: The deal underscores the growing importance of cybersecurity in cloud computing and highlights Israel's role as a global leader in the sector.
  • Strategic Shifts: Alphabet's move signals a strategic pivot toward expanding its security offerings to compete more effectively in the cloud market.