In an unexpected twist, talks between Google and cybersecurity startup Wiz for an acquisition valued at $23 billion have fallen apart, a source close to the negotiations said. In an email sent to employees Monday and obtained by The Wall Street Journal, Wiz CEO Assaf Rappaport communicated that the company will now focus on an initial public offering (IPO).
“Wizards, I know the last week has been intense with rumors of a potential acquisition,” Rappaport wrote. “While we are flattered by the offers received, we have decided to continue on our path to build Wiz”.
Rappaport also mentioned that the company aims to reach $1 billion in annual recurring revenue before the IPO. Currently, Wiz generates $500 million in annual recurring revenue, The Wall Street Journal recently reported. The company expects to reach the $1 billion goal within the next year and conduct its IPO in the next few years, according to the source.
Negotiations of this caliber are often unpredictable, and it is possible that the two companies will resume talks in the future. However, a deal of this magnitude could have attracted antitrust scrutiny. Google, whose parent is Alphabet, is awaiting a verdict in a Justice Department lawsuit alleging illegal practices to maintain its dominance in online search. The federal agency filed a second antitrust lawsuit last year, still without a trial, alleging unfair practices in Google's ad tech business.
Founded in 2020, Wiz has quickly become one of the most promising companies in the cloud computing security field. So far this year, it has raised $1 billion at a $12 billion valuation, standing out as one of the few startups outside of the artificial intelligence industry to reach such a high valuation by 2024. Wiz is backed by prominent Silicon Valley venture capitalists including Sequoia Capital, Andreessen Horowitz, Index Ventures and Lightspeed Venture Partners.
The acquisition of Wiz would have boosted Google's offering in cloud computing, a field where it currently lags behind competitors such as Amazon and Microsoft. A $23 billion deal would have been, by a wide margin, the largest acquisition for Google. The most significant purchase to date was that of Motorola Mobility for $12.5 billion in 2012. Two years ago, Google acquired another cybersecurity company, Mandiant, for $5.4 billion.
