CyberArk to acquire Venafi for $1.54 billion in major deal

CyberArk has announced a definitive agreement to acquire Venafi, a leader in machine identity management, for approximately USD $1.54 billion in cash and shares. This strategic acquisition is aimed at creating a unified, end-to-end machine identity security platform that will enhance CyberArk's identity security capabilities and expand its total addressable market (TAM) by nearly USD $10 billion to approximately USD $60 billion.

The explosion in digital transformation and ongoing cloud migration efforts have resulted in the exponential growth of machine identities, which now outnumber human identities by a factor of 40. Machine identities, including workloads, code, applications, IoT devices, and containers, serve as a lucrative target for cybercriminals if left unprotected. Effective and automated management of these identities is essential to secure communications and prevent costly outages.

Venafi's platform offers comprehensive capabilities including certificate lifecycle management, private Public Key Infrastructure (PKI), IoT identity management, and cryptographic code signing. When combined with CyberArk's secrets management solutions, the platform promises robust machine identity protection that can be deployed as both Software-as-a-Service (SaaS) and hybrid solutions. The merger is expected to be immediately beneficial to margins and provide significant revenue synergies through cross-sell, up-sell, and geographic expansion.

Matt Cohen, CyberArk's CEO, highlighted that the acquisition marks a pivotal milestone for the company. "By combining forces with Venafi, we are expanding our abilities to secure machine identities in a cloud-first, GenAI, post-quantum world," he said. "This integrated approach will empower Chief Information Security Officers to defend against increasingly sophisticated attacks leveraging both human and machine identities." Cohen also praised Venafi for sharing CyberArk's customer-centric and security-first culture.

Chip Virnig, Partner at Thoma Bravo, noted that Venafi has been a leader in machine identity management and has made significant strides in accelerating SaaS growth and expanding margins. He expressed confidence that CyberArk is the ideal partner to take Venafi's capabilities to the next level, delivering significant value to shareholders.

The transaction, which is expected to close in the second half of 2024, is subject to regulatory approvals and other customary closing conditions. Venafi is anticipated to add approximately USD $150 million in annual recurring revenue, further strengthening CyberArk's business model with 95% recurring revenue. The agreement has been approved by the Boards of Directors of both companies.

Morgan Stanley is CyberArk's exclusive financial advisor, with legal counsel from Latham & Watkins. Piper Sandler advises Thoma Bravo, with legal counsel from Kirkland & Ellis.