US cybersecurity company Palo Alto Networks, which was founded by Israeli Nir Zuk, is in talks to buy two Israeli companies for an overall amount of $1 billion, in order to improve its capabilities and competitiveness in cloud security for enterprises. According to industry sources, Palo Alto Networks is in talks to acquire Dig Security for $300-400 million and Talon Cyber Security for $650 million.
Dig Security has developed a platform to prevent data leaks for databanks in the cloud. The company was founded in 2021 and has raised $45 million since then. In its most recent financing round in 2021, Dig Security had a company valuation of $125 million and it is now being sold well above that valuation at between $300 million and $400 million. Investors includes Team8, for which this would be one of its most significant exits in the current wave of acquisitions of cybersecurity companies. Other investors include CrowdStrike, CyberArk and Merlin Ventures. Later investors who will enjoy lower returns include Signal Fire and Flicis Ventures.
Talks between Palo Alto Networks and Dig Security have been conducted over the past few months and are now in their most advanced stages. The acquisition is expected to be announced in the coming few weeks, although the discovery of the talks by the media could complicate matters, as happened when Palo Alto Networks' talks to buy Israeli cybersecurity company Apiiro broke down in September 2022.
Two of Dig Security's Israeli rivals - Polar Security and Laminar - have been acquired earlier this year by IBM and Rubrik Security respectively - the latter for an estimated $250 million. Dig Security is considered the leading company in this trio and will therefore almost certainly fetch a far higher price. Source familiar with the potential deal say that it would expect to be sold for at least double its most recent valuation. Dig's security concept includes not only identifying dangerous information configurations but also continuous monitoring of data drawn from the databases and returned to them, while identifying malicious use and preventing an attack on the enterprise. Estimates are that Dig Security's annual revenue rate is higher than its two rivals that were acquired.
Talon Cyber Security
Talon Cyber Security, which Palo Alto Networks is in talks to acquire for an estimated $650 million, is also a leader in its cybersecurity category of end point security mainly from browsers. Palo Alto Networks understands how Google's Chrome browser has become a data security liability that is responsible for hacks and leaks of a lot of data from enterprises and has been identified as the next point of weakness that must be protected.
Palo Alto Networks, led by CEO Nikesh Arora, has already made 17 acquisitions, even before the potential acquisitions of Talon and Dig Security. Palo Alto's business development team is known for its monitoring of many cybersecurity companies worldwide, which it maps and when the opportunity arises makes tempting acquisition offers. The company, which is mainly active in the field of hardware devices, also wants to strengthen its product offerings for enterprises that only operate on the corporate cloud, and therefore makes purchases in the field to compete with other giants such as CrowdStrike, SentinelOne and Lacework.
Published by Globes, Israel business news - en.globes.co.il - on September 27, 2023.
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