Palo Alto Networks on Wednesday announced an agreement to buy CyberArk, a leader in identity security, in a deal valued at $25 billion.
Under the terms of the deal, CyberArk shareholders will receive $45 and 2.2005 shares of Palo Alto Networks common stock for every CyberArk share they own.
The combined company will represent Palo Alto Networks’ formal entry into the identity-security space, making it a core piece of the company’s multi-platform strategy.
“Our market entry strategy has always been to enter categories at their inflection point and we believe that moment for identity security is now,” Nikesh Arora, chairman and CEO of Palo Alto Networks, said in the announcement.
In a letter to shareholders, Arora noted that identity has historically been separated into privileged access management and identity and access management. IAM dealt with basic cyber hygiene, while PAM dealt with a small group of privileged users. But 90% of breaches involve stolen or mismanaged credentials, Arora said, and therefore PAM is no longer limited to a subset of administrators.
Palo Alto Networks said it expects the deal to increase its revenue growth and gross margins.
Industry analysts said the agreement could reshape the future of the cybersecurity industry’s competition to manage identity security threats.
“This acquisition elevates the consolidation trend that has characterized the IAM market in recent years to a new level, reshaping not only the IAM landscape but also the broader cybersecurity industry,” said Geoff Cairns, principal analyst at Forrester. “Identity security is foundational to modern cybersecurity, and CyberArk’s areas of expertise in privileged identity management and machine identity security strongly complement Palo Alto Networks independent security platform approach.”
Both companies’ boards of directors have already agreed to the deal, which is expected to close during the second half of Palo Alto Networks’ fiscal year, following approval by federal regulators and CyberArk shareholders.
