Historically, in its second-biggest deal, Google has agreed to buy out Mandiant Inc., a cybersecurity company, for $5.4 billion.
The second biggest buy-out deal of Google
Purchasing Mandiant will give Google more tools to protect its clients who use its cloud services from online threats with faster response. Facing stiff competition from Microsoft and Amazon Inc., Google strives to recruit and support its cloud clients.
As per Bloomberg News, Google will buy Mandiant at $23 per share in an all-cash deal. Post the acquisition, Mandiant will become part of the Google Cloud business.
Microsoft had also shown interest in Mandiant but pulled out of talks two weeks ago, according to people with knowledge in the matter and who did wish to be identified as discussions were private. The words were aborted as Microsoft felt that the security business collection of Mandiant was not a strategic fit for Microsoft.
Google’s cloud business can help diversify beyond advertising, the primary source of revenue and profit. Thomas Kurian, who took over as CEO in 2019 of Google Cloud, has resorted to different ways to expand to make service more reliable and revamping partnerships for many more bespoke projects for clients.
Google cloud division sales rose by 47% in 2021, but competition maintained its lead. Google held a 10% cloud provider market share in the fourth quarter of 2021, Amazon commanded 33%, and Microsoft had 21 % of the market share, according to Synergy Research Group Data.
Two decades ago, Kevin Mandiant, an ex-U.S. Air Force officer, founded Mandiant and acquired a reputation for incident response services. First reported by The Information website, Mandiant talks with Google sent its shares up by 16% on Monday. The stock went up to $22.49 in the biggest single-day gain since February 8, when talks with Microsoft were reported. Mandiant shares have advanced 28% this year so far. However, after Bloomberg reported that Microsoft had pulled out of negotiations, Mandiant shares slipped by as much as 6.1 % as investors’ anticipation of bidding war did not materialize.
Last year FireEye Inc. sold its security product business to Symphony Technology Group, making its exit from Mandiant, which it purchased in 2013. Mandiant became a standalone company again, and its current market capitalization is $5.26 billion after Monday’s rally.
The Mandiant deal will dwarf all other Google acquisitions except for its 2012 Motorola Mobility buyout for $12.5 billion.
Google’s biggest challenge is to get the regulators to approve this deal amid numerous antitrust investigations. Google’s purchase of Fitbit, a tech wearable company for $2.1 billion, took more than 14 months to get the regulatory scrutiny done before it could close the deal. It expects the same for Mandiant transactions.
