Wiz Walks Out of $23 B Google Deal, Opts for IPO Instead

New York-based cybersecurity startup, Wiz, has ended $23 billion acquisition talks with Google’s parent company, Alphabet. The Google-Wiz deal would have become the largest acquisition ever for the US tech giant.

According to CNBC, Wiz told its employees that it would be pursuing an initial public offering (IPO) as it had planned previously.

Building Wiz

News of the Google-Wiz acquisition being called off were shared through a memo sent to employees. A Wiz insider, who asked to maintain anonymity, said the decision to walk out of the deal was made after the startup weighed investor and antitrust concerns.

“I know the last week has been intense, with the buzz about a potential acquisition. While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz. Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice,” Assaf Rappaport, Wiz Co-founder said in the memo.

Rappaport said the startup will now focus its energy on the Wiz IPO and growing its revenue to $1 billion annually. Wiz had been working on these goals before its talks with Google went public.

Wiz Valuation

Neither Wiz nor Google had acknowledged the acquisition talks officially. Wiz didn’t mention Alphabet or Google in its memo either. However, sources close to the company said talks between the two companies started soon after Wiz raised $1 billion from venture capital investors early this year.

The funding round placed Wiz valuation at $12 billion. The called off Google-Wiz deal would have doubled this valuation. Founded in 2020, Wiz has grown fast under Rappaport. The start attained the $100 million annual revenue mark 18 months after commencing operations. Last year, its annual revenue was $350 million.

Previously, Wiz founders built Adallom, a security startup. They raised funds from Index and Sequoia, then sold the company to Microsoft for $320 million. The Covid pandemic came soon after Wiz launched in 2020. The pandemic pushed businesses to adopt cloud-based infrastructure and software to keep employees working remotely.

Wiz benefited from this shift. Today, its cybersecurity products can flag threats in data and applications in Amazon, Microsoft, Oracle, and Google public clouds.

Setback for Google

Wiz specializes in cloud-based cybersecurity. Its solutions help businesses to identify and eliminate vital risks on cloud platforms.

The Google-Wiz deal call-off is a major setback for Google. Wiz has a rich cloud security product portfolio that would have helped Google to compete with Microsoft’s security software products.

The tech giant has been building its cloud infrastructure and seeking clients. Last year, its cloud business generated over $33 billion in revenue. Although Google has grown its cloud business consistently in recent years, it’s under pressure to sustain this growth and attract more business during the AI boom.

Alphabet suffered another merger and acquisition blow after it walked away from a deal with digital marketing software firm, HubSpot.