The massive acquisition deal is likely to be an accelerant to M&A activity in the cloud security space, according to TD Cowen’s Shaul Eyal.
Google’s $32 billion Wiz acquisition deal could be just the beginning of a coming wave of M&A activity focused on cloud security, a TD Cowen analyst told investors Tuesday.
The all-cash deal — which is subject to regulatory approval and other closing conditions — is aimed at bolstering Google Cloud’s cybersecurity portfolio with capabilities from Wiz’s fast-growing cloud and AI security platform.
[Related: Analysis: How Wiz Went From Zero To $32B In Five Years]
Partners told CRN the deal would make Google Cloud a far more formidable player against both public cloud rivals Microsoft and AWS. Without a doubt, the same holds true when it comes to competitors such as Palo Alto Networks, CrowdStrike, SentinelOne and other standalone security vendors that have increasingly focused on cloud security in recent years.
Notably, along with having the highest price tag for an acquisition in Google’s history, the Wiz deal would also be “the largest ever cybersecurity standalone security acquisition, illustrating the market’s importance,” wrote Shaul Eyal, a managing director and senior analyst at TD Cowen, in a note to investors Tuesday.
Among the likely results is that the Google-Wiz deal serves as an accelerant to a new round of M&A activity in the cloud security space, Eyal wrote.
“This deal could herald a flurry of activity as Cloud providers bolster security offerings,” he wrote.
Eyal noted that he expects the deal to receive antitrust approvals given Wiz’s comparatively modest cloud security market share.
Ultimately, “we anticipate a potential new M&A cycle in this space,” he said. “We believe other cybersecurity names, especially smaller market caps, may generate acquisition interest.”
Similarly, in an earlier note to investors citing Monday’s reports about the potential Google-Wiz deal, Wedbush Securities’ Daniel Ives suggested that the time may have come for some of the numerous cloud security vendors in the market to join forces.
“The cloud cyber security space is ripe for consolidation in our view with massive growth opportunities on the horizon heading into this AI Revolution,” wrote Ives, managing director and senior equity research analyst at Wedbush.
The overall tech M&A environment, he noted, “has been extremely quiet to start the year.”
However, “we believe that this acquisition will open the door to a massive wave of M&A across the tech landscape [and] especially within cybersecurity, as more cloud operators look to secure their cloud portfolios while more cyber names look to capitalize on their all-in-one platform approaches by scooping up undervalued companies and improving their offerings,” Ives wrote.
