Another acquisition is in the bin for Alphabet, after cybersecurity startup Wiz chose to decline a record-breaking offer this week in favor of moving ahead solo.
Saying No to Big Tech Buyout
It’s official – the cybersecurity startup Wiz does not want to be bought out by Alphabet, according to a memo sent to company employees.
Ongoing Talks Ended
Google’s parent company Alphabet Inc. had been in talks to buy the Israeli startup and made a $23 billion dollar offer that would have been the largest acquisition in the history of the company.
A Record-Breaking Deal
According to data provider PitchBook, it would also have been the largest-ever purchase of a venture-backed company.
Focusing on Previous Plans
But it wasn’t to be. Despite being offered twice the amount of the company’s latest valuation of $12 billion, Wiz CEO Assaf Rappaport declined the offer and maintained that Wiz will now focus on its original plan to go public.
Continuing On Their Path
“While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz,” the staff memo from Rappaport stated according to a report from Bloomberg.
A “Humbling” Offer
“Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice,” it continued.
No Response Yet
Neither Alphabet nor Google have responded to requests for comment by the media, and neither have publicly acknowledged that the talks were taking place.
Advanced Talks
However, inside sources and multiple media outlets confirmed that the talks had reached the advanced stage earlier this month.
Perfect for Google’s Arsenal
An acquisition of Wiz, which provides broad cyber-security services for companies who use cloud-computing systems, would have been a major move for Alphabet, which is looking to expand its cloud infrastructure in the coming years.
A Startup Taking Off
Wiz is a rapidly expanding startup, recently raising $1 billion in private funding following its $12 billion valuation. The company itself claims that it had the fastest rise from $1 million to $100 million in annual recurring revenue of any startup in the world.
Partnered With Major Companies
The startup is now partnered with a range of major companies that use cloud-computing services, including 40% of all Fortune 500 companies.
$12 Billion Valuation Drew Them in
Talks between Google and Wiz reportedly began shortly after Wiz achieved its $12 billion valuation and $1 billion funding round in May.
A Sore Spot for Google
The decision to call off all acquisition discussions will be a blow for Google, which has made cloud services and infrastructure one of its main points of focus in the coming years.
Google Cloud Growth
Google Cloud, the company’s cloud computing service, is now the third-largest of its kind in the world. It generated $9.57 billion for Google in the first quarter of the year, growing by 28% over that period.
Would It Pass?
While it may have sent Alphabet back to square one, reports from the Financial Times claimed that some board directors at Alphabet and Wiz had expressed that even if Wiz agreed to the buyout, it was not guaranteed approval by federal regulators.
Double Dose of Federal Scrutiny
Under the Biden administration, mergers and acquisitions in Big Tech have received a double dose of scrutiny from antitrust regulators, with the Federal Trade Commission blocking some deals from going through.
Did Skepticism Kill the Deal?
Some inside sources believe it was this skepticism that ultimately scuppered the deal, as groups on each board pushed to end it once news of the talks went public.
Lina Khan Strikes Again
“Lina Khan killed another deal,” one person involved in the deal allegedly said after the decision was made, in reference to the FTC chair Lina Khan.
Second M&A to Fall
This is the second acquisition to fall through for Alphabet in past months after the company recently walked away from a potential deal to take over online marketing software company HubSpot.
Focusing on IPO
Wiz will now move to make an initial public offering, which had been its goal prior to the talks with Google. It will also work toward achieving its next financial milestone – $1 billion in annual recurring revenue.
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