Contact: Adrian Sanabria Scott Denne
Palo Alto Networks buys into the endpoint security business with its $200m acquisition of early-stage vendor Cyvera. The deal moves the next-generation firewall provider into a new corner of the security market and mirrors other transactions by competitors that have also taken advantage of their rising stock prices to buy companies that can wring larger purchases from their customers.
Palo Alto will pay $112m in stock and $88m in cash for Cyvera when the deal closes. In exchange, it gets ownership of a service that protects endpoints by recognizing techniques used by hackers and preventing them from executing on endpoints. Cyvera, which has 55 employees and raised $13m in venture capital, isn’t expected to add notable billings or revenue to Palo Alto until later next year.
The deal is similar to FireEye’s $1bn acquisition of Mandiant earlier this year. In that transaction, FireEye, like Palo Alto, was aiming to extend itself beyond its focus on network security and into a larger total addressable market (TAM). While the price tag for Mandiant (which came with a large and lucrative consulting practice) was higher than Cyvera, the latter acquisition is more significant – with this deal, Palo Alto will immediately cover a larger swath of the security market.
We’ll have a longer report on this transaction in our next 451 Market Insight.
Security companies hunt larger TAM
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Source: The 451 M&A KnowledgeBase *451 Research estimate
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