Google Talks to Acquire Cybersecurity Startup Wiz Fall Apart

“Wizards, I know the last week has been intense, with the buzz about a potential acquisition,” he wrote. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz.”

He also said the company intends to reach $1 billion in annual recurring revenue ahead of the IPO.

Wiz is aiming to reach the $1 billion annual recurring revenue mark within the next year and to IPO within the next few years, the person with knowledge of the discussions said.

It currently generates $500 million in annual recurring revenue, The Wall Street Journal recently reported.

Deal talks—especially involving tie-ups of this scale—are notoriously unpredictable. It is possible the companies could return to the negotiating table.

Among the reasons the deal fell apart were that the two sides couldn’t agree on whether Wiz would remain a separate unit within Google or be integrated into its cloud-computing business, a person familiar with the matter said.

In addition, Wiz and some of its investors had concerns about the time it would take for a deal to clear regulatory hurdles, with some people estimating it could take until the end of next year to close, according to knowledgeable people. A long waiting period could have hampered Wiz’s growth and financial prospects if regulators ultimately blocked the deal.

Google is currently awaiting a verdict in a Justice Department lawsuit claiming it used illegal means to retain its dominance in online search. The federal agency last year filed a second antitrust suit, which hasn’t gone to trial, alleging unfair practices in Google’s ad-tech business.

Wiz was founded in 2020 and rapidly became one of the hottest companies in the burgeoning field of security for cloud computing. It raised $1 billion earlier this year at a valuation of $12 billion, making it one of just a handful of startups outside the artificial-intelligence industry to raise money at a higher valuation in 2024.

It is backed by high-profile Silicon Valley venture capitalists including Sequoia Capital, Andreessen Horowitz, Index Ventures and Lightspeed Venture Partners.

Acquiring Wiz would have helped boost Google’s offering in cloud computing, a field where it lags behind competitors Amazon.com and Microsoft.

A $23 billion purchase of Wiz would have been the largest acquisition by a wide margin for Google, whose parent Alphabet is scheduled to report earnings Tuesday. Its biggest deal to date was the $12.5 billion purchase of Motorola Mobility that closed in 2012.

Earlier this year, Google was examining a potential deal for software company HubSpot, which has a market value of around $25 billion, but backed off, partly due to regulatory concerns, people familiar with the matter said.

Two years ago, Google bought another cybersecurity company, Mandiant, for $5.4 billion.

Lauren Thomas and Laura Cooper contributed to this article.