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Google Parent Alphabet Unveils $32B Deal to Acquire Cybersecurity Startup Wiz

HomeGoogle Parent Alphabet Unveils $32B Deal to Acquire Cybersecurity Startup Wiz

Google Parent Alphabet Unveils $32B Deal to Acquire Cybersecurity Startup Wiz

Google Parent Alphabet Unveils $32B Deal to Acquire Cybersecurity Startup Wiz

Summary

Alphabet (GOOG, GOOGL) shares are under pressure after announcing an agreement to acquire Wiz in a $32 billion deal. The cloud security platform is set to join Google Cloud after the deal closes. In this article, Madison Mills and Simeon Hyman of Catalysts take a closer look at the deal and its implications for M&A activity.

The Acquisition: A Closer Look

Alphabet has announced an agreement to acquire Wiz in a $32 billion all-cash deal. This is Google's largest ever acquisition and part of the company's efforts to boost cloud security. Once the deal closes, Wiz will join Google Cloud, while its products will continue to be available across all other major cloud services.

Simeon Hyman on M&A Activity

Simeon Hyman, global investment strategist at ProShares, shares his insights on the acquisition and its implications for M&A activity. According to Hyman, corporate balance sheets are incredibly strong, with leverage at near-all-time lows and net debt to EBITDA at 1.5 times. This means that companies have plenty of room to spend money.

Valuations and Deal Making

Alphabet is currently the cheapest of the MAG 7, with a forward 12-month PE ratio of 17 times earnings. However, David Costin from JPM has lowered his target for M&A this year from 25% down to 7% in terms of growth. Hyman attributes this pessimism to regulatory and tariff uncertainty in Washington.

The Wild Card: Regulatory Uncertainty

According to Hyman, the only wild card that could impact M&A activity is regulatory uncertainty. If this uncertainty decreases, it would remove some of the barriers towards deal making. Despite the downturn in growth expectations, Hyman believes that there is still upside potential for M&A activity.

Conclusion

Alphabet's acquisition of Wiz marks a significant move by Google to boost cloud security. The deal has implications for M&A activity and highlights the strength of corporate balance sheets. While regulatory uncertainty may impact deal making, Simeon Hyman remains optimistic about the future of M&A activity.