Palo Alto Networks is to buy Israeli secure identity systems provider CyberArk in a deal valued at roughly $25 billion (£19bn), the companies said.

CyberArk shareholders are to receive $45 cash for each of their shares as well as 2.2005 Palo Alto shares under the deal, which Palo Alto said it expected to close during its fiscal 2026.

The deal is Palo Alto’s biggest-ever acquisition, and gives it access to the secure identity market at a time that the firm characterised as pivotal.

Identity tools

As companies prepare to make increasing use of semi-autonomous AI “agents”, the technology around identity – which controls who does and doesn’t have access to organisations’ data – will become increasingly critical, Palo Alto has said in comments to the media.

CyberArk, which has been traded publicly for just over a decade, competes with large, established providers such as Okta and Microsoft.

Palo Alto said it believes its scale can help accelerate growth for CyberArk’s tools.

Cybersecurity deals have been a major force in the mergers and acquisitions market this year after a slow period caused by economic uncertainty.

In March Google made its biggest takeover to date, spending $32bn to buy cloud security start-up Wiz.

Palo Alto itself bought start-up Protect AI for an undisclosed sum to add to its AI offerings, and in 2023 took over Talon Cyber Security, Dig Security and Zycada Networks.

The company’s shares fell 5.6 percent in trading on Wednesday after announcing the deal, erasing most of its gains for the year.

Consolidation

Cybersecurity consolidation isn’t proceeding without challenges, with the US Justice Department reportedly reviewing the deal on antitrust grounds.

The probe is in its early stages and could last for several more months before the Justice Department decides whether to try and block the deal or to let it proceed, Bloomberg reported last month.

The potential for antitrust scrutiny had been a significant factor as the companies negotiating the deal, with Wiz executives wary after Adobe’s attempted $20bn takeover of Figma failed due to antitrust objections in late 2023, according to a previous Reuters report.

Wiz agreed to the deal after US president Donald Trump was sworn into office at the prospect of reduced regulatory oversight, but even so Google has agreed to pay Wiz a fee of more than $3.2bn if the deal does not close, the report said.