The talks for Google's multi-billion dollar acquisition of Israel's cybersecurity company Wiz, have failed, the Wall Street Journal reported early on Tuesday. Wiz chief executive Assaf Rappaport said the company is now aiming for an initial public offering.
“Wizards, I know the last week has been intense, with the buzz about a potential acquisition,” he wrote. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz.”
Rappaport went on to say that the company was aiming to reach the $1 billion annual recurring revenue mark within the next year and to IPO within the next few years, the knowledgeable person told the paper.
Although no official reason was given for the breakdown of the talks between the two tech companies, a source told the Wall Street Journal that among the reasons was U.S. regulatory challenges.
"A deal with Wiz could have drawn antitrust scrutiny, the paper said. "Google is currently awaiting a verdict in a Justice Department lawsuit claiming it used illegal means to retain its dominance in online search."
Uri Yaffe, CEO of Annabella LTD and former head of cyber infrastructure sales at Check Point, commented described the deal falling through as "primarily a huge loss to Israeli high-tech" but advised against hasty criticism, noting that such agreements are subject to regulatory scrutiny and global market influences.
"Wiz stands out as an exceptional company with immense potential," Yaffe said. "Terminating the deal could even further its long-term objectives. The Google transaction sets a benchmark for the minimum price of the forthcoming public offering. Moreover, it wouldn't be unexpected if Wiz attracts additional acquisition propositions pre-IPO."
Wiz was founded by CEO Assaf Rappaport; VP of Products Yinon Costica, VP of Technologies Ami Lutbek and VP of Research and Development Roy Reznik. The entire team has been working together for more than 20 years - including as the managers of Microsoft's cloud security group, which purchased Adallom, which they founded, for approximately $320 million.
In May, Wiz raised $1 billion at a valuation of $12 billion. Wiz recently predicted that 2024 will be the "year of consolidation" in the field of cyber security; in April it announced the acquisition of Gem Security, as part of the expansion of the company's cloud application security platform, and in December it acquired the start-up Raftt. The company tried unsuccessfully in the last year to acquire Sentinel One and Lysork.
At the end of 2023, the company reached a sales volume of $350 million, after becoming the fastest-growing software company in the world - and reached an ARR (Annual Recurring Revenue) of $100 million within 18 months from the day it started selling its products. At the beginning of the year, Wiz announced the appointment of Dali Rajak, former chief operating officer and president of the public cyber company Zyskyler, as president and chief operating officer.