Palo Alto Networks Broadens Cybersecurity Consolidation With $25B Deal

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4 days ago

Faced with something of an identity crisis, Palo Alto Networks is going all-in on identity security.
The cybersecurity firm, which has been seeking ways to bulk up and expand its portfolio of services, announced Wednesday an agreement to buy Israeli identity security company CyberArk for $25 billion. It's just the latest in a massive wave of dealmaking in cybersecurity, though investors aren't exactly digging Palo Alto's new look.
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Check Your Privilege(d Access)
Palo Alto's big splurge isn't exactly surprising. The company has been open about its push for 'platformization' of its services, the bundling of lots of different cybersecurity offerings into a single package to better serve customers seeking to slash vendors and limit costs. As a result, the company has spent roughly $7 billion on about 20 acquisitions since 2018, according to a Financial Times analysis, including most recently a $500 million deal in April for AI security firm Protect AI.
The CyberArk purchase marks Palo Alto's entrance into the 'identity security' market, which includes services such as privileged access management, secret-keeping and customer access. The acquisition comes at an 'inflection point' for the space, thanks to the rise of agentic AI, Palo Alto Networks CEO Nikesh Arora said in an interview with CNBC's 'Squawk Box' on Wednesday.
So no-brainer, right? Not exactly. Palo Alto has also been quite open about its push (more like desperate need) for growth. And given the deal's hefty price tag, which makes it the biggest acquisition in company history, analysts on Wednesday highlighted concerns that the transaction is an all-too-simple, potentially clunky solution to its problem:
'Our initial take is negative since we think the message implied is that Palo Alto is concerned about the organic growth runway, and thus is potentially seeking to acquire into a new market segment and new growth,' BMO Capital Markets analyst Keith Bachman wrote in a note seen by Investor's Business Daily. In its third-quarter earnings report in May, Palo Alto announced lower revenue forecasts for its next quarter than Wall Street expected.
RBC Capital analyst Matthew Hedberg, meanwhile, said the 'glaring' size of the deal, struck at a roughly 26% premium to CyberArk's shares over a 10-day period through July 25, is a potential red flag. Palo Alto's share price has plunged more than 12% since The Wall Street Journal reported on a potential deal on Tuesday, while CyberArk's has risen more than 15%.
Wiz Kids: The mega deal is part of a fad. Last year, Cisco closed its $28 billion purchase of cyber firm Splunk, while Alphabet's $32 billion acquisition of cloud security firm Wiz, announced in March, remains the biggest deal of 2025 so far. If it's completed, that is. In June, multiple outlets reported that the US Department of Justice's antitrust division began investigating whether the tie-up could illegally limit competition. According to a Reuters report earlier this year, the two sides had accelerated acquisition talks following November's presidential election, believing the new administration would usher in a laxer era of antitrust scrutiny. For now, it seems Big Tech still hasn't built a regulatory firewall.
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