Google to acquire cybersecurity firm Mandiant in a $5.4 billion deal

Google and Microsoft were both trying to strengthen their cybersecurity operations, which are becoming an increasingly important element of the firms’ cloud computing businesses.

Google, a subsidiary of Alphabet Inc, announced on Tuesday that it will purchase cybersecurity firm Mandiant Inc in a deal for around $5.4 billion, as demand for its cloud services skyrockets. This would be the company’s second-largest deal in its history.

According to reports, Microsoft withdrew from negotiations more than a week ago. The conversations with Google, which were originally revealed by the Information website, pushed Mandiant shares up 16 percent at the closing of trade on Monday.

Google and Microsoft were both aiming to strengthen their cybersecurity operations, which are becoming an increasingly important element of the firms’ cloud-computing businesses. Google gains new capabilities to safeguard clients and respond to internet attacks with the acquisition of Mandiant. Kevin Mandia, a former US Air Force officer, launched the company about two decades ago and has built a name for its crisis response services.

According to one of the people, Microsoft stopped its acquisition negotiations due to worries that Mandiant’s collection of security firms was not a good enough strategic match. Mandiant’s shares closed Monday at $22.49, the highest one-day rise since February 8, when the Microsoft negotiations were disclosed. This year, the stock has increased by 28 percent.

In late trading, the stock gave up some of its gains when Bloomberg reported that Microsoft had withdrawn from negotiations, indicating that investors were expecting a bidding battle. The stock dropped as much as 6.1 percent.

Mandiant became a standalone firm again last year when FireEye Inc. sold its security-product business to a consortium led by Symphony Technology Group for $1.2 billion. Mandiant was purchased by FireEye in 2013. Following Monday’s surge, the takeover target is worth $5.26 billion in the market.

A sale of that amount would dwarf any prior Google transaction, with the exception of its $12.5 billion purchase of Motorola Mobility in 2012.

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