Less than a year following the breakdown of Google's attempt to purchase Israeli cybersecurity company Wiz, executives finalized a deal with accelerated negotiations after U.S. President Donald Trump took office just eight weeks earlier.
Google improved its initial offer from $23 billion in July to $32 billion, one of the largest tech deals to date, and boosted the breakup fee to over $3.2 billion, according to insiders. The pivotal factor for Wiz and Google executives was the change in the White House that potentially meant a more favorable antitrust review under Trump, sources indicated.
Negotiations continued as Wiz contemplated an IPO, but talks intensified after Trump's inauguration on Jan. 20, with key antitrust officials appointed in his administration. Fazal Merchant became Wiz's Chief Financial Officer in January, contributing significantly to finalizing the deal alongside CEO Assaf Rappaport, insiders revealed. Google's cloud chief Thomas Kurian also played a vital role in the agreement.
Wiz leaders found Google's revised offer, 39% higher than the initial bid, compelling. The deal included a considerable reverse breakup fee of more than $3.2 billion, or over 10% of the deal value, if the acquisition failed, sources disclosed.
The high breakup fee is atypical in U.S. corporate transactions, but has become more common due to rising regulatory challenges. Notably, in deals over $1 billion in 2023, breakup fees ranged from 4% to 7% of the overall value, as per a Fenwick & West study.
It is unclear if Google and Wiz engaged U.S. antitrust authorities before finalizing the deal, as some companies proactively inform antitrust regulators before signing significant agreements to mitigate risks.
Wiz executives were cautious following Adobe's unsuccessful bid for Figma due to antitrust scrutiny in 2023. Notably, Google is currently facing antitrust lawsuits regarding online search dominance and ad technology.
Google had initially proposed a $2 billion breakup fee to Wiz, which was considered insufficient, particularly with concerns about potential FTC actions under Lina Khan's leadership, sources revealed.
The appointment of Andrew Ferguson and Gail Slater to lead the FTC and antitrust reviews at Justice, respectively, instilled confidence in a smoother regulatory review for both Google and Wiz, according to insiders.
Google, Wiz, the White House, and Justice officials did not respond immediately to comment requests.
Bank of America advised Google on the deal, while Goldman Sachs advised Wiz.