Wiz IPO on Tap After $23 Billion Google Deal Folds
Wiz IPO on Tap After $23 Billion Google Deal Folds
With its strong growth and fundraising savvy, the company could pull off one of the biggest IPOs
- Wiz’s potential $23 billion deal with Alphabet has failed.
- Leadership cited antitrust concerns as U.S. regulators increased enforcement.
- So, Wiz in refocusing on an initial public offering as it grows revenue.
Wiz’s deal with Alphabet (Google) falls through
Wiz, a cloud-based cybersecurity firm, ended talks with Alphabet(GOOG) this week, concluding what would have been Google’s largest acquisition.
CNBC reported the news Monday, citing a memo from Wiz co-founder Assaf Rappaport. The memo stated, “Saying no to such humbling offers is tough.”
The $23 billion deal would have doubled Wiz’s valuation of $12 billion. It marks a setback for Google, which competes with Amazon (AMZN) and Microsoft (MSFT).
Amazon and Microsoft have increasingly relied on CrowdStrike (CRWD) for security over the past year, and Microsoft acquired Miburo in 2022, a company specializing in cyber threat analysis.
Wiz has quickly gained credibility in cybersecurity over the past couple of years. The company discovered a critical vulnerability in Azure, Microsoft’s cloud infrastructure, last year. Earlier this year, Wiz uncovered vulnerabilities in SAP SE’s (SAP) AI Core service.
Antitrust concerns stifle deal as regulators step up enforcement efforts
The memo, as reported by CNBC, stated that the company’s focus will shift back to a public listing. Wiz will, at the same time, focus on a recurring revenue target of $1 billion annually.
According to CNBC, citing a person familiar with the matter, antitrust and investor concerns were factors that led to the deal’s collapse.
Last year, the Department of Justice (DOJ) and Federal Trade Commission (FTC) issued stricter guidelines for mergers. Investors believe the updated guidelines, while not explicitly naming them, were directed at large companies such as Google and Amazon.
Wiz to focus on initial public offering (IPO) after deal collapses
Wiz raised $1 billion in funding from venture capital earlier this year at a valuation of $12 billion. Investors include Lightspeed Venture Partners, Andreessen Horowitz, and Thrive Capital. Wiz’s ability to raise capital is clear, and its leadership is likely confident in its path toward an IPO.
Rappaport has stated several times that the company is focused on a public listing, which would enable Wiz to grow aggressively by tapping the financial markets for additional capital.
Wiz is poised for triple-digit growth, Rappaport said during a CNBC interview. The post-COVID-19 era has benefited cloud-based security providers, as more companies push their data to cloud-based infrastructure.
Given Wiz’s fundraising ability and the company’s revenue growth, an IPO could come as soon as later this year. It could be one of the biggest IPOs in recent years if the valuation holds. In the meantime, Wiz leadership has expressed interest acquiring smaller cybersecurity companies.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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