Wiz Rejects Google’s $23 Billion Acquisition Offer to Pursue Independent Growth

Wiz Chooses Independence Over Google’s Huge Offer

Last week, it appeared that Google was on the verge of acquiring the cybersecurity start-up Wiz for an astounding $23 billion, which would have marked the tech giant’s largest acquisition to date. However, in a surprising turn of events, Wiz informed its employees on Monday evening that the deal would not proceed. Instead, the company has decided to pursue a public listing on a stock exchange, as detailed in a memo obtained by The New York Times.

In the memo, Assaf Rappaport, Wiz’s CEO, emphasized the company’s commitment to its original goal of reaching $1 billion in recurring revenue before initiating an initial public offering (IPO). He expressed gratitude for the offers they had received but affirmed their decision to continue growing independently. “While we are flattered by the offers we have received, we have chosen to continue on our path to building Wiz,” Rappaport wrote. “Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice.”

Google has yet to release an official comment regarding this development, and a representative from Wiz has also declined to make any statements. Reports from CNBC and Fortune had previously covered the contents of the memo earlier on Monday.

If the acquisition had gone through, it would have injected significant momentum into Google’s cloud-computing division and helped the company remain competitive against its long-time rival, Microsoft, in the realm of cybersecurity. A growing number of businesses are increasingly relying on Wiz to safeguard their cloud applications.

Historically, Google has never engaged in a purchase of this magnitude, especially not for a relatively young start-up like Wiz, which was founded just four years ago. Its largest acquisition to date was the $12.5 billion purchase of Motorola Mobility in 2012, a deal that ultimately resulted in a loss for the company just a few years later.

This time, however, the regulatory environment presents significant challenges. Google has faced friction with U.S. regulators recently, with the Justice Department filing two separate antitrust lawsuits against the company aimed at curbing its market dominance. One case focuses on its widely used search engine, while the other seeks to dismantle its digital advertising technology business. A verdict in the search case is anticipated this summer.

Under the Biden administration, regulators have adopted a stringent stance against corporate consolidation. For instance, the Federal Trade Commission unsuccessfully attempted to block Microsoft’s acquisition of the video game company Activision, while Amazon abandoned its plans to acquire iRobot amid resistance from both American and European regulators.

It is worth noting that a government review of a multibillion-dollar acquisition can extend for over a year, potentially stifling a company’s momentum during that period. This could be especially detrimental for Wiz, which has consistently highlighted its rapid growth trajectory. Earlier this year, the company reported generating over $350 million in annualized revenue, a significant increase from $100 million two years prior.

In his memo, Rappaport remarked that the heightened attention from potential investors and the media following the news of a possible acquisition by Google has motivated him to continue developing the company independently. “The market validation we have experienced following this news only reinforces our goal,” he stated, emphasizing their commitment to “creating a platform that both security and development teams love.”