Palo Alto Networks-CyberArk Combination Would Be ‘Watershed Deal:’ Analyst

The acquisition of a major identity security vendor would provide one of the final missing pieces for Palo Alto Networks’ platform strategy, according to Wedbush’s Daniel Ives.

Reported talks that could lead to Palo Alto Networks acquiring CyberArk would represent a bold strategic move for the cybersecurity giant and its platform strategy, according to a Wall Street analyst.

Palo Alto Networks is in negotiations to acquire identity security vendor CyberArk in deal that would be by far the largest in the cybersecurity giant’s history if it happens, The Wall Street Journal reported Tuesday.

[Related: Analyst: Palo Alto Networks, SentinelOne M&A Deal ‘Highly Unlikely’]

Identity security vendor CyberArk had a $20 billion market capitalization prior to the report, and the M&A deal under discussion with Palo Alto Networks could be worth “well above” that amount, according to the Journal’s report.

In separate email statements to CRN Tuesday, Palo Alto Networks and CyberArk each said they do not comment on “rumor or speculation.”

In a note to investors Tuesday, Daniel Ives, managing director and senior equity research analyst at Wedbush Securities, wrote that a Palo Alto Networks-CyberArk combination would be a “watershed deal in the cyber security landscape” if finalized.

Palo Alto Networks has assembled product capabilities in nearly all of the major cybersecurity segments, and adding identity security would constitute one of the final missing pieces, according to Ives.

A deal for CyberArk would serve to “further bolster PANW’s platformization strategy” and ultimately solidify Palo Alto Networks as an “end to end stalwart,” Ives wrote.

CyberArk specializes in privileged access management as well as identity and access management, identity governance and other categories related to protecting identities. The company acquired machine identity vendor Venafi for $1.54 billion in 2024 and identity governance startup Zilla Security for as much as $175 million in February.

CyberArk has more than 10,000 customers “leveraging its capabilities for identity security and privileged access management to protect businesses’ sensitive information against cyber threats,” Ives wrote, “which would provide plenty of cross-sell/upsell opportunities for PANW within the space.”

Along with putting Palo Alto Networks “further at the forefront of the cyber industry,” a deal with CyberArk would also likely “force” additional consolidation in the cybersecurity industry, he noted.

Citing sources familiar with the negotiations, The Wall Street Journal reported that an M&A deal between Palo Alto Networks and CyberArk could be reached by the end of the week.

Palo Alto Networks has never paid more than $800 million for an acquisition in the past, wrote Shaul Eyal, a managing director and senior analyst at TD Cowen, in a note to investors last week pertaining the cybersecurity giant’s M&A strategy.

The company has acquired at least 17 companies since 2018, most recently completing its acquisition of Protect AI, a startup focused on AI security, last week.