Google's (NASDAQ: ) talks about a possible acquisition of cybersecurity startup Wiz for $23 billion have dropped, according to a Wall Street Journal report on Tuesday.
The WSJ said in an email to employees Monday, which it saw, Wiz Chief Executive Assaf Rappaport said the company is now seeking an initial public offering.
He is reported to have written: “Witches, I know the last week has been hectic, there is a lot of noise about a possible discovery.”
“While we are pleased with the promises we have received, we have chosen to continue our approach to building Wiz.”
He reportedly added that the company aims to hit $1 billion in annual revenue before the IPO.
The WSJ added that the size of a potential deal could not be predicted. However, they are aware of the possibility that companies may return to the negotiating table.
Reacting to this report, TD Cowen analysts said that “the termination of these negotiations may be caused by concerns about mistrust. They admitted that the cloud security market, which was estimated at $35 billion in 2022, is currently dominated by a few leaders.
Meanwhile, analysts say they believe that “there will be a negative impact on the entire sector because this agreement does not happen.”
“First, Google still wants to double down on cyber security once
The shift to the cloud has accelerated this potential strategic move. “We also believe in Microsoft as well as Google and Amazon, the end of the CrowdStrike crisis from Friday once again highlighted the interconnected nature of cyber security software and the cloud ecosystem.”
While a Wiz deal isn't on the table yet, analysts say this could kick off an M&A cycle as major cloud and tech giants look to acquire cybersecurity software within their broader product portfolios.
“We believe that consolidation is overdue in the cybersecurity sector and we can expect Microsoft to move in this direction and look to strengthen its cybersecurity platform in the next 12 to 18 months and Google is looking at other candidates in both communities. / security vendor of private cyber,” the company concluded.
