How Trump's Presidency Accelerated Google's $32B Wiz Acquisition

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Less than a year after Google's plans to acquire Israeli cybersecurity firm Wiz fell through, the tech giant was able to finalize the deal in a fast-paced round of negotiations following the inauguration of U.S. President Donald Trump just eight weeks earlier.

In July, Google raised its original offer from $23 billion to $32 billion, making it one of the largest tech acquisitions in history, and also increased the breakup fee to more than $3.2 billion. However, the decisive factor for Wiz executives was the change in leadership at the White House, which they believed would result in a more favorable antitrust review under Trump's administration.

Although Google made an initial attempt last fall while Wiz considered an IPO, negotiations became more regular after Trump's inauguration on January 20, when new antitrust officials were appointed. Wiz also brought in a new Chief Financial Officer, Fazal Merchant, in January, who played a key role in finalizing the deal alongside CEO Assaf Rappaport. Google's cloud chief, Thomas Kurian, was also instrumental in the agreement.

Wiz executives found it difficult to turn down Google's revised offer, which valued the cybersecurity firm 39% higher than the previous bid. The deal also included a higher reverse breakup fee, over 10% of the total value, which would be payable to Wiz if the deal fell through. Google justified the premium given Wiz's rapid 70% annual revenue growth and more than $700 million in annualized revenue.

Reverse termination fees, though not common in corporate deals, have become more prevalent as regulatory scrutiny on large transactions has increased. The fee in this case was notably higher than the average range of 4% to 7% for such deals in 2023.

It's unclear whether Google and Wiz approached U.S. antitrust regulators before signing the deal. Some companies, like Tempur Sealy in 2023, have briefed regulators in advance to smooth the approval process.

Wiz executives were cautious after Adobe's attempt to acquire Figma for $20 billion fell apart due to antitrust concerns in late 2023. Google itself is facing antitrust challenges, including two lawsuits from the U.S. Department of Justice regarding its dominance in search and ad technology.

Google had initially offered a $2 billion breakup fee, which Wiz felt was too low to compensate for the risk of regulatory roadblocks. However, the appointment of Andrew Ferguson to head the Federal Trade Commission and Gail Slater to oversee antitrust reviews at the Justice Department provided confidence that the regulatory process would be smoother, according to sources.

Bank of America advised Google on the deal, while Goldman Sachs advised Wiz.

Paraphrasing text from "Reuters" all rights reserved by the original author