Cybersecurity giant Palo Alto Networks announced on Wednesday that it has entered into a definitive agreement to acquire CyberArk, a global leader in identity security, in a cash-and-stock deal valued at approximately $25 billion. This strategic move marks Palo Alto Networks' formal entry into the identity security market and is its largest acquisition to date.
Under the terms of the agreement, CyberArk shareholders will receive $45.00 in cash and 2.2005 shares of Palo Alto Networks common stock for each CyberArk share held. This represents a 26% premium to the unaffected 10-day average of the daily VWAPs of CyberArk. The transaction, which has been unanimously approved by the boards of directors of both companies, is expected to close during the second half of Palo Alto Networks' fiscal year 2026, subject to regulatory clearances and approval by CyberArk shareholders.
Nikesh Arora, Chairman and CEO of Palo Alto Networks, stated that the acquisition is an attempt to get ahead of the demand for identity security tools in the age of artificial intelligence. “Our market entry strategy has always been to enter categories at their inflection point, and we believe that moment for Identity Security is now,” Arora said. He added that “the rise of AI and the explosion of machine identities have made it clear that the future of security must be built on the vision that every identity requires the right level of privilege controls.”
CyberArk, an Israeli firm founded in 1999, specializes in identity security, including privileged accounts on corporate servers, helping businesses protect sensitive data. The acquisition is seen as a move to strengthen Palo Alto's Zero Trust capabilities with a full stack of identity solutions. The transaction is expected to be immediately accretive to Palo Alto Networks' revenue growth and gross margin.
The market reacted with mixed feelings to the news. CyberArk shares jumped 13% on the news, while Palo Alto Networks' shares fell more than 10%. Despite the stock drop, analysts view the deal as a strategic move that strengthens Palo Alto's position in AI and identity security.
This acquisition is part of a broader consolidation trend in the cybersecurity industry. Cybersecurity providers are becoming more acquisitive, with some looking to offer a full platform of products to customers seeking to save money by reducing vendors. This deal is the second-largest in the cybersecurity business this year, following Google's agreement to acquire Wiz for $32 billion. Palo Alto Networks has made at least 17 acquisitions since 2018, including the recent purchase of Protect AI.
The combined company will aim to become the 'cyber guardian' for its customers, allowing them to focus on their core business objectives and AI adoption while Palo Alto Networks secures their digital future. The integration of CyberArk's technology will extend privileged identity protection to all identity types, including human, machine, and the new wave of autonomous AI agents.