We reported in September that Palo Alto was getting ready to make yet more security acquisitions out of Israel, specifically of Dig Security and Talon. Today, some confirmation of one of those has arrived: The U.S. security giant said it would be acquiring Dig. The company is not disclosing the financial terms but our sources say it is in the region of $400 million.
From what we understand, the second deal we reported on at the same time as Dig, for Talon, is still being completed. Together the two companies will total about $1 billion in M&A for Palo Alto Networks, sources close to the negotiations have said.
This Dig acquisition is a key development for Israel, especially right now.
Tech is a huge part of the country’s economy, with cybersecurity being especially a big part of that. But movements in that industry — investments, M&A, expansions, product launches — have in many ways ground to a halt in the wake of current political events.
Israel is in the middle of a major retaliatory attack on Gaza as it seeks to root out Hamas after the latter group broke into the country and killed 1,400 Israelis and, in retreating back to Gaza, took hundreds back as hostages. The whole conflict has spilled out into becoming a global concern, and crisis, given how many people are now also being killed in Gaza, and the wider ramifications for everyone as a result. In the meantime, much of the country’s tech industry has been commandeered to become a part of the war effort.
As we have previously reported, Dig’s focus is data security posture management. Specifically it helps understand where an organization’s assets reside across the cloud — or more likely a mix of cloud environments — providing a picture to security teams both to help understand what is moving where, but also what to lock down (and where) in the event of a breach.
The company’s tools will become a part of Palo Alto’s Prisma business, which focuses on cloud security.
“As companies build AI-enabled applications, there will be a substantial increase in the amount of data transferred to the cloud,” said Lee Klarich, CPO for Palo Alto Networks, in a statement. “Dig’s highly innovative DSPM technology helps safely enable this shift, and its dedicated team will complement and help advance Palo Alto Networks’ strengths across cloud security. The announcement of our intent to join forces with Dig reinforces our longstanding commitment to our team in Israel and to continue growing our footprint with its talented and dedicated cybersecurity professionals.”
“Modern cloud applications leverage a broad set of data stores to meet the complex needs of businesses. We developed an award-winning DSPM solution to alleviate this strain by providing a centralized offering to monitor and manage the security of these cloud data stores,” added Dan Benjamin, CEO and co-founder of Dig. “Integrating Dig’s technology with Prisma Cloud will enable customers to effectively manage the security of their diverse data stores in modern cloud applications and reduce the risk of data breaches. My co-founders and I look forward to continuing our innovation journey with Palo Alto Networks to make the world safer.”
At a time when a lot of investing has slowed to a crawl, security continues to be a huge priority for enterprises and smaller businesses.
A McKinsey report from last year notes that breaches are on track to collectively cost $10.5 trillion annually by 2025, a 300% increase on 2015 figures. While a lot of companies have clamped down on spending and IT budgets over the last couple years, security is one area where they have returned to spending even when other categories have remained frozen or constrained.
“For end customers, security is still a big business risk, so budgets are back in action and we’re seeing sales picking up in Q3 and Q4,” a source told us when we first got wind of the deal. “Security companies will want to tap into this opportunity aggressively.”
Other examples of M&A in the space, specifically around Israeli cybersecurity companies, include CrowdStrike acquiring security startup Bionic for $350 million, and IBM buying Polar earlier this year for $60 million — a deal IBM made, we understand, partly in response to Palo Alto buying Cider Security in 2022. Cisco is also buying Splunk for $28 billion.
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