CyberArk to pay $1.45b for US co Venafi

CyberArk founder and executive chairman Udi Mokady credit: David Shopper

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Venafi's field is machine identity management. The deal is expected to close in the second half of the year, subject to regulatory approvals.

Israeli cybersecurity company CyberArk (Nasdaq: CYBR) is making a substantial acquisition. The company announced today that it will pay $1.54 billion for US company Venafi, a machine identity management solutions company, from private equity firm Thoma Bravo. Thoma Bravo bought Venafi in 2020 at a valuation of $1.15 billion.

CyberArk will pay approximately $1 billion in cash and approximately $540 million in shares, representing 5.6% of its share capital, but according to the report that CyberArk filed with the US Securities and Exchange Commission, the amount that will actually be paid in cash, after adjustments for Venafi’s debt and cash, will total $856 million. At the end of the first quarter, CyberArk had over $1.3 billion cash, versus debt of $572 million to holders of its convertible bonds.

The deal is expected to close in the second half of the year, subject to regulatory approvals. The acquired company is expected to add annual recurring revenue (ARR) of $150 million to CyberArk, which gave ARR guidance of $975-990 million before the acquisition, which is expected to contribute immediately to profit margins thanks to synergies through cross-sell, up-sell and geographic expansion.

CyberArk, which was founded by its chairperson Udi Mokady and is currently headed by Matt Cohen, specializes in identity security. The company says that Venafi "offers complementary solutions that expand CyberArk’s total addressable market by nearly $10 billion to approximately $60 billion."

In its announcement of the deal, CyberArk states: "Digital transformation and ongoing cloud migration have led to an exponential increase in the number of machine identities, such as workloads, code, applications, IoT devices and containers. The number of machines is rapidly outpacing the growth in their human counterparts, with more than 40 machine identities for every human identity. Left unprotected, they serve as a lucrative hunting ground for cybercriminals.

"These machine identities need to be discovered, managed, secured and automated to keep their connections and communications safe."

"This acquisition marks a pivotal milestone for CyberArk, enabling us to further our vision to secure every identity - human and machine - with the right level of privilege controls," CyberArk CEO Matt Cohen said. "By combining forces with Venafi, we are expanding our abilities to secure machine identities in a cloud-first, GenAI, post-quantum world. Our integrated technologies, capabilities and expertise will address the needs of global enterprises and empower Chief Information Security Officers to defend against increasingly sophisticated attacks that leverage human and machine identities as part of the attack chain."

Published by Globes, Israel business news - en.globes.co.il - on May 20, 2024.