Report: Google-Wiz Acquisition Falls Apart

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Facts

  • Cloud computing start-up Wiz has decided not to accept Google parent company Alphabet's reported acquisition offer of $23B, according to a memo, instead choosing to pursue an initial public offering (IPO) of $1B. CEO Assaf Rappaport reportedly cited US antitrust and investor concerns as reasons.1
  • Wiz, founded by four former Israeli military officers in 2020, has been valued at $12B, making the decision to back out of the deal 'tough,' according to an email written by Rappaport. The co-founders each own 9% of the company, with venture firms Index Ventures, Sequoia Capital, and Thrive Capital, among others, also owning stakes.2
  • The deal would have been Google's largest-ever acquisition — almost double its $12.5B purchase of Motorola Mobility in 2012.3
  • The founders of Wiz also have a history of successful acquisitions, including their 2015 sale of security company Adallom to Microsoft for $320M.1
  • Google, which is awaiting an antitrust verdict from the US Justice Department, previously bought cybersecurity company Mandiant for $5.4B in 2022 and is also reportedly considering buying cybersecurity firm HubSpot.4

Sources: 1CNBC, 2TechCrunch, 3New York Times and 4Wsj.

Narratives

  • Narrative A, as provided by CNBC. It seems growing antitrust sentiments have scared Wiz into backing down. As this $23B offer was certainly difficult to turn down, the regulatory pressure from Washington was strong enough to send Wiz to a risky IPO over the easy acquisition money, and marks a significant setback for Google.
  • Narrative B, as provided by MintPress News. While this is certainly a setback for Google, it could also have repercussions for Israel. Contributing 20% to the nation's GDP, Israel — suffering economic damage from the ongoing war — is dependent on the tech company, and any loss of confidence in it will directly impact the country's economy. This isn't a smart move.