Google’s biggest deal ever comes with a $3.2 billion gamble
Google just inked a $32 billion acquisition of cloud security firm Wiz — its largest-ever deal — after reportedly upping its original $23 billion offer from last year, which had fallen apart over regulatory concerns. Notably, the latest deal carries a staggering $3.2 billion breakup fee (10% of the deal’s value), which Alphabet would pay Wiz if the deal falls through, far above the usual 4% to 7% seen in tech M&A, per Reuters.
What’s behind the big gamble?
Wiz’s rapid growth, with annual revenues reportedly growing 70% year on year, and Google’s urgent push to compete with Amazon’s AWS division and Microsoft’s Azure in cloud computing drove the deal, while a shift in FTC leadership under President Trump gave both sides the confidence to push ahead after months of back-and-forth talks, according to sources speaking to Reuters.
It’s hard to judge exactly how Wall Street feels about the deal’s sky-high price tag: Alphabet shares fell 4% after the news yesterday — but then so did many of its Big Tech peers. Furthermore, despite it being the company’s largest, the acquisition still only represents ~1.5% of GOOGL’s $2 trillion market value.
What’s behind the big gamble?
Wiz’s rapid growth, with annual revenues reportedly growing 70% year on year, and Google’s urgent push to compete with Amazon’s AWS division and Microsoft’s Azure in cloud computing drove the deal, while a shift in FTC leadership under President Trump gave both sides the confidence to push ahead after months of back-and-forth talks, according to sources speaking to Reuters.
It’s hard to judge exactly how Wall Street feels about the deal’s sky-high price tag: Alphabet shares fell 4% after the news yesterday — but then so did many of its Big Tech peers. Furthermore, despite it being the company’s largest, the acquisition still only represents ~1.5% of GOOGL’s $2 trillion market value.
