In a surprise development, cybersecurity startup Wiz has turned down a $23 billion acquisition offer from Google parent Alphabet. Instead, according to an internal memo first reported by news outlet CNBC, Wiz will pursue an initial public offering (IPO) as previously planned.
The news is surprising as the $23 billion offer is many multiples of what Alphabet has offered other prior acquisition targets, including Mandiant for $5.4 billion in September 2022. Google’s offer was also nearly double Wiz’s $12 billion valuation in its most recent round of funding.
Neither Wiz nor Google parent Alphabet would publicly acknowledge a deal was being discussed before Wiz rejected the offer.
“Saying no to such humbling offers is tough”
Wiz co-founder Assaf Rappaport
Wiz hit $100 million in annual recurring revenue after only 18 months and $350 million last year. Its cloud visibility and security platform extends across hybrid and multi-cloud environments, such as AWS, Azure, Google Cloud, and Oracle.
Using agentless techniques to gain visibility into each customer cloud environment, the platform is known to be lightweight and easy to deploy and manage. Customers prefer its simple operation and drastically cheaper pricing model versus competitors.
Antitrust concerns likely were a factor
While Wiz didn’t officially state reasons other than pursuing an IPO for rejecting Google’s offer, U.S. government antitrust concerns were likely a deciding factor. Acquiring Wiz would have made Google Cloud, currently a distant third against cloud service provider competitors Microsoft Azure (#2) and Amazon AWS (#1), significantly more attractive to multi-cloud customers.
Antitrust regulators have recently increasingly focused on “big tech” acquisitions. Antitrust concerns have shelved potential acquisitions such as Figma by Adobe and HubSpot by Google.
Wiz plans IPO as next priority
With the acquisition offer out of the picture, Wiz co-founder Assaf Rappaport said the company has two priorities: $1 billion in annual recurring revenue and an IPO. Both were targets before the Google offer.
Rejecting an acquisition doesn’t just disappoint Google: Wiz’s venture capital backers Index Ventures, Sequoia, Insight Partners, and Lightspeed Venture Partners will also lose out on a lucrative exit.
But that isn’t a concern for Rappaport and other Wiz leadership. When CNBC at the New York Stock Exchange asked about going public, Rappaport replied, “Yeah, definitely. That’s why we’re here.”
Wiz’s venture capital backers will have to wait for an exit, but it may be worth the wait.
Disclaimer: The author of this article is a current employee of Google. This article does not represent the views or opinions of his employer and is not meant to be an official statement for Google, or Google Cloud.
