Google claimed to acquire cloud security startup Wiz for a record-breaking $23 billion. However, the proposal was rejected by Wiz, allegedly due to antitrust concerns and some investors' worries. Some suggest that CrowdStrike's recent trouble gave Wiz a good opportunity to seize market share.
On July 23, in a stunning setback for Google, its acquisition target -- cloud security startup Wiz -- announced that it will proceed with its initial public offering as originally planned.
Wiz co-founder Assaf Rappaport said in a memo that it was difficult to resist the tempting offers.
Google announced recently that it will acquire the company for $23 billion, which means a valuation nearly twice as high as its latest round of funding at $12 billion.
Rappaport added that the company will focus on achieving its next business milestone: an IPO and $1 billion in annual recurring revenue. These have been the company's long-standing goals even before Google's acquisition offer was made public.
One source said that part of the reason why Wiz rejected Google's acquisition offer was due to antitrust concerns and worries from some of its investors.
Wiz had expressed its intention to go public in May this year, which caught Google's attention. However, since Wiz was not short on funds, Google's acquisition may not have been the dream come true for Wiz.
Independent Development
Founded in 2020, Wiz achieved its annual revenue target of $100 million 18 months after its establishment, and is expected to reach $350 million in recurring revenue by 2023. Its cloud security products include prevention, proactive detection, and response services that enable users to identify and eliminate critical risks on cloud platforms with the help of AI.
These products are very attractive to Google. Google has been investing in cloud infrastructure, and acquiring Wiz can win more customers for its cloud business. Google's cloud business created more than $33 billion in revenue last year.
In 2022, Google acquired cybersecurity company Mandiant for $5.4 billion, and the more promising Wiz made Google offer the highest acquisition price in the tech industry.
But Wiz's rejection undoubtedly poured cold water on Google's excitement. This is also the second recent setback for Google and its parent company Alphabet in the mergers and acquisitions field, as the company was reportedly giving up its efforts to acquire HubSpot, an online marketing software company.
On the other hand, last weekend, one of Wiz's major competitors, CrowdStrike, experienced a malfunction, causing many companies around the world to suffer from blue screens and network paralysis, and allowing the market to reevaluate the important value of cybersecurity companies.
Some analysts believe that Wiz may see CrowdStrike's incident as an opportunity to further solidify their market position and would prefer to raise funds on the public market in order to become an independent network giant rather than a branch of a tech giant.
Editor/Lambor