Talks between Google and Israeli cybersecurity startup Wiz over a possible $23 billion acquisition have fallen apart, The Wall Street Journal reported on Monday.
If a deal had been reached, it would have represented Google parent company Alphabet’s biggest-ever acquisition (scorching the previous record of $12.5 billion for Motorola Mobility in 2012).
In an email to employees on Monday, Wiz Chief Executive Assaf Rappaport said the company is now planning an initial public offering.
“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.”
Rappaport said Wiz intends to reach $1 billion in annual recurring revenue ahead of the IPO.
Its current annual recurring revenue is half that, the Journal reported.
Still, the company hopes to reach the $1 billion mark within the next year and an IPO in the next few years, a source told the Journal.
The paper noted the companies could return to talks as deals of such scale are unpredictable.
Wiz would have helped Google bolster its cloud computing offerings, a field where it trails the competition, Amazon.com and Microsoft.
Google has shown interest in the Israeli market, in 2013 purchasing Waze for $1.1 billion, creating the Jewish state’s first domestic unicorn (a startup reaching $1 billion in valuation without being listed on the stock market).
While Wiz is headquartered in New York City with nearly a thousand employees scattered across North America and Europe, most of its engineering team is based in Tel Aviv, where the 40-year-old Israeli co-founder and CEO Assaf Rappaport was born.
Since its founding in Israel in 2020, the economic worth of the firm, which offers cybersecurity software for cloud computing, has skyrocketed. The company in May announced a funding round of $1 billion at a staggering $12 billion valuation.
According to Wiz, the company hit $100 million in annual recurring revenue after 18 months and in February of this year reached $350 million in annual recurring revenue, with a 40% market share of Fortune 100 customers.
Wiz already partners with Google and other leading cloud companies, including Amazon and Microsoft.
It plans to hire 400 more people in 2024.
In February 2023, Wiz announced it was transferring its funds out of Israel due to concerns over judicial reform. The funds would be transferred to bank accounts around the world, the company said.
It joined Papaya Global and Disruptive Technologies Venture Capital, which all withdrew holdings from Israel.
Wiz claimed Israeli tech would be harmed if the reforms were implemented Israel’s standing as a tech hub could be harmed.
Judical reform was derailed by the social unrest orchestrated by anti-government groups, which organized protests and acts of civil disobedience.
The outbreak of war following the Hamas invasion of Oct. 7 put an end to the government’s effort to overhaul Israel’s judicial system.
