Palo Alto seeks identity security growth in $25B CyberArk acquisition
Gettyimages.com/ Thicha Satapitanon
By
Nick Wakeman
Palo Alto sees the increasing use of artificial intelligence as driving demand for cybersecurity platforms that span network and identity security.
Palo Alto Networks plans to make a $25 billion stock-and-cash acquisition of CyberArk, an information security company headquartered in Israel.
Palo Alto sees identity security, an area CyberArk specializes in, which Palo Alto sees as at an inflection point and one it wants to exploit.
The move is part of Palo Alto's strategy to enter new markets that are fragmented, but starting to coalesce.
“This strategy has guided our evolution from a next-gen firewall company into a multi-platform cybersecurity leader,” Palo Alto Nikesh Arora said in a release Wednesday.
With this acquisition, Palo Alto says its annual recurring revenue will go past the $10 billion mark and that is a first for any cybersecurity company, Arora said.
The company wants to in front of the growing demand for identity security because of the increasing use of artificial intelligence, Arora added.
Identity security is more than just usernames and passwords. It includes employees, IT systems, developers, applications and increasingly AI agents. CyberArk brings to Palo Alto experience in privileged access management, an important subset of identity security.
“The rise of AI and the explosion of machine identities have made it clear that the future of security must be built on the vision that every identity requires the right level of privilege controls,” Arora said. “Together we will define the next chapter of cybersecurity.”
The transaction will impact the public sector market as each company has relationships with major resellers. Offerings from both companies have also been FedRAMP-certified and are on the Defense Department's approved product list.
Along with the increasing use of AI, the federal government is also pushing more security requirements such as the Zero Trust concept.
Palo Alto is offering $45 in cash and 2.2 shares for each CyberArk share. The transaction is expected to close sometime in 2026. The deal is Palo Alto’s largest acquisition.
J.P. Morgan Securities LLC is acting as financial advisor to Palo Alto Networks, and Wachtell, Lipton, Rosen & Katz is acting as legal counsel and Arnold & Porter Kaye Scholer LLP is acting as regulatory counsel. Qatalyst Partners is acting as financial advisor to CyberArk and Latham & Watkins LLP and Meitar Law Offices are acting as legal counsel.