Citigroup: If Google successfully acquires Wiz, these two cybersecurity companies will benefit
Google is in negotiations with the cybersecurity startup Wiz to discuss a possible acquisition. If the deal is successful, Palo Alto Networks and Crowdstrike, the two cybersecurity companies, may benefit. Citigroup stated that this acquisition could be advantageous for other companies in the cybersecurity field. The acquisition multiple of this deal is relatively high, betting on cybersecurity as a preferred brand. This may have an impact on the competition between Palo Alto Networks and Wiz. In addition, Citigroup also mentioned that the impact of this deal on other companies in the cybersecurity field is "mixed"
According to the information obtained by the Financial Intelligence APP, Google (GOOGL.US) is in negotiations with the cybersecurity startup Wiz for a potential acquisition. The potential deal could be valued at up to $23 billion, making it the largest acquisition in Google's history. Additionally, acquiring Wiz could strengthen Google's presence in the cloud computing sector and help narrow the gap with its competitors.
In response to this, Citigroup stated that Google's acquisition of the cybersecurity startup Wiz is a "bold move," which could be beneficial for other companies in the cybersecurity field. Citigroup analyst Fatima Boolani mentioned in an investor report, "In our view, the acquisition multiple of this deal seems high, indicating a firm bet on cybersecurity as the preferred 'enterprise' brand route. It provides a clear corporate mindshare/market share channel, while also structurally impacting the next wave of network transformation, SecOps prioritization, and significant public cloud migration trust tickets for Wiz's multi-cloud support [cloud-native application protection platform]."
If this deal is successful, according to Citigroup, Palo Alto Networks (PANW.US) and Crowdstrike (CRWD.US) may benefit, as these companies can leverage the "noise" surrounding Wiz's lack of vendor neutrality. Citigroup also mentioned that given the potential for "competitive encroachment" between Palo Alto Networks and Wiz, they are interested to see how the six-year agreement between Palo Alto Networks and Google (believed to be worth 10 figures) will evolve.
Citigroup also stated that the impact of this potential deal on other companies in the cybersecurity field is "mixed," including Zscaler (ZS.US) and Checkpoint (CHKP.US), as their cloud-native application protection platform portfolios are "less mature." The firm mentioned that other companies in the cloud-native application protection platform sector, such as Fortinet (FTNT.US), SentinelOne (S.US), and Rapid7 (RPD.US), may also be negatively affected.
It is worth noting that analysts from Morgan Stanley previously mentioned that Google's acquisition of Wiz could raise questions about Wiz's ability to maintain neutrality and work across clouds, "a situation that could benefit Palo Alto Networks and Crowdstrike in the short term, as they can both leverage their independence as a competitive advantage."