Google To Buy Incident Response Superstar Mandiant For $5.4B

‘We believe today‘s deal is the tip of the iceberg to a massive phase of consolidation potentially ahead for the cloud space. This deal was a shot across the bow from Google to Microsoft and Amazon,’ says Dan Ives of Wedbush Securities.

Google plans to go all-in on cybersecurity, agreeing to purchase Mandiant for $5.4 billion to help enterprises stay protected across cloud and on-premise environments.

The Mountain View, Calif.-based search and public cloud behemoth said Reston, Va.-based Mandiant will bring real-time and in-depth threat intelligence gained from working with the largest organizations in the world on the frontlines of cybersecurity. This acquisition will enable system integrators, resellers, and managed security service providers to offer broader solutions to customers, according to Google.

“The Mandiant brand is synonymous with unmatched insights for organizations seeking to keep themselves secure in a constantly changing environment,” Google Cloud CEO Thomas Kurian said in a statement. “Together we can make a profound impact in securing the cloud, accelerating the adoption of cloud computing, and ultimately make the world safer.”

[Related: Google Cloud To Buy Mandiant: The 5 Biggest Things To Know]

Google will pay $23 per share for Mandiant, which represents a 57 percent premium to Mandiant’s weighted average stock price in the 10 days leading up to Feb. 7. The following day, Bloomberg reported that Microsoft was examining an acquisition Mandiant, which sent Mandiant’s stock up more than 20 percent. Google’s interest in buying Mandiant was first reported Monday afternoon by The Information.

Mandiant’s stock is down $0.83 (3.69 percent) to pre-market trading Tuesday to $21.66 per share, while Google’s stock is down $5.57 (0.22 percent) to $2,522 per share in pre-market trading Tuesday. The Information’s deal report was published shortly before the market closed Monday, and Mandiant’s stock jumped $3.11 (16.05 percent) to $22.49 per share in the 20 minutes prior to the market’s close.

“Cyber security is a mission, and we believe it’s one of the most important of our generation,” Mandiant CEO Kevin Mandia said in a statement. “Google Cloud shares our mission-driven culture to bring security to every organization. Together, we will deliver our expertise and intelligence at scale via the Mandiant Advantage SaaS platform, as part of the Google Cloud security portfolio.”

The deal comes just four months after Mandiant sold its network, endpoint, and email security product business to Symphony Technology Group (STG) for $1.2 billion, meaning the company’s SaaS platform is now vendor agnostic. Microsoft pulled out of talks with Mandiant more than a week ago over concerns that Mandiant’s security business wasn’t a good enough strategic fit, Bloomberg reported late Monday.

“We believe today‘s deal is the tip of the iceberg to a massive phase of consolidation potentially ahead for the cloud space,“ Wedbush Securities Analyst Dan Ives wrote in a note to clients. ”In a nutshell, this deal was a shot across the bow from Google to Microsoft and Amazon.”

This is the second largest acquisition in Google’s 23-year history behind only its $12.5 billion purchase of Motorola Mobility in 2012. Google’s buy of Mandiant is subject to Mandiant stockholder and regulatory approvals and is expected to close later this year.

“Organizations around the world are facing unprecedented cybersecurity challenges as the sophistication and severity of attacks that were previously used to target major governments are now being used to target companies in every industry,” Kurian said. “We look forward to welcoming Mandiant to Google Cloud to further enhance our security operations suite and advisory services.”

The deal with Mandiant comes two months after Google purchased Security Orchestration, Automation and Response (SOAR) vendor Siemplify for a reported $500 million to help businesses more effectively hunt, detect, and respond to threats. Google plans to integrate Siemplify with its Google Chronicle security analytics platform to help organizations modernize and automate their security operations.

Mandiant’s 2021 revenue jumped to $483.5 million, up 21 percent from $399.7 million the year prior. The company recorded net income of $918.6 million, or $3.81 per diluted share, up from a net loss of $207.3 million, or $0.95 per diluted share, due to the $1.2 billion sale of the FireEye products business. Many of Mandiant’s competitive losses were due to customers not wanting to use FireEye products.

“There has never been a more critical time in cybersecurity,” Mandia said in a statement. “Since our founding in 2004, Mandiant’s mission has been to combat cyberattacks and protect our customers from the latest threats. To that end, we are thrilled to be joining forces with Google Cloud. Together, we will deliver expertise and intelligence at scale, changing the security industry.”