Wiz rejects $23bn Google acquisition offer opting for IPO

Alphabet, the parent company of Google, had set its sights on Visa as a strategic addition to its cloud security portfolio. The $23 billion acquisition offer would have been the largest in Google’s history, doubling the $12 billion valuation that Wiz achieved in its last fundraising round in May.

This offer represented a strategic move for Google to bolster its cloud security capabilities, positioning itself more competitively against industry giants. With Amazon and Microsoft dominating the space, Alphabet saw Wiz’s cutting-edge technology as a game-changer. The acquisition would have significantly enhanced Google’s cybersecurity portfolio, complementing its previous acquisitions of Mandiant for $5.4 billion and Siemplify for $500 million.

Despite the lucrative nature of the offer, Wiz’s leadership, led by CEO Assaf Rappaportdecided to stay the course with their original plan of pursuing an IPO.

“While we are fluttered by offers we have received, we have chosen to continue on our path to building Wiz,” Rappaport wrote in an internal note sent to the company’s 1,200 employees on Monday.

The Wiz way: Independence over acquisition

The potential for a protracted regulatory approval process was one of the contributing factors to Wiz’s decision to reject Alphabet’s $23 billion offer. Given the increasing scrutiny on Big Tech acquisitions, particularly those involving market leaders like Google, the deal could have faced significant antitrust challenges. Google is already entangled in multiple lawsuits from the US Justice Department, accusing it of abusing its dominant position in search and digital advertising.

Additionally, Wiz’s leadership belief that an IPO would allow Wiz to retain control over its destiny. Going public would provide the necessary capital infusion to fuel further innovation and expansion, without compromising the company’s vision.

“The market validation we have experienced following this news only reinforces our goal – creating a platform that both security and development teams love,” Rappaport wrote in the memo. “We are grateful for the faith our employees, investors, and customers have in us as we build the best cybersecurity company in the world.”

Wiz’s decision to reject Alphabet’s offer is a clear indication of its ambitious future plans. Rappaport has outlined the company’s next milestones: reaching $1 billion in annual recurring revenue and pursuing an initial public offering. This aims to capitalize on the company’s rapid growth and market validation.

Since its founding in 2020, has already made significant strides, quickly establishing itself as a leader in the cloud security market. The company’s innovative tools for scanning infrastructure and software for security threats have attracted a substantial customer base, including 40% of Fortune 100 companies. With $350 million in annual recurring revenue and a recent $1 billion funding round, Wiz is well-positioned for continued expansion.

The company’s strategic acquisitions, such as Gem Security and Raftt, further enhance its comprehensive security offerings, solidifying its market position and paving the way for a successful IPO.

By going public, Wiz aims to solidify its position as a leading independent cybersecurity company, providing innovative solutions that address the evolving security needs of enterprises worldwide.

Impact on Google and the cloud security market

Wiz’s decision to pursue an IPO is poised to attract considerable attention from investors and market analysts, given the company’s rapid growth and substantial market impact. The company had previously signaled its plans for an IPO once it achieved specific financial milestones, a goal that now appears imminent as it continues to expand its client base and revenue streams.

For Alphabet and Google the failed acquisition represents a setback. Alphabet’s interest in acquiring Wiz is part of its broader strategy to fortify its cybersecurity portfolio, address the growing cybersecurity threats and enhance Google Cloud’s offerings. Despite this, Google continues to make strides in the cloud security market, leveraging its Gemini AI model to help clients analyze threats.

The rejection of the deal indicates Wiz’s confidence in its market position and growth potential, as well as the robust health of the cybersecurity marketwhich continues to attract significant investment.