Donald Trump may have been the missing part of the jigsaw for Alphabet (GOOGL) as it finally completed its acquisition of Israeli cybersecurity firm Wiz. Yesterday Google agreed to pay $32 billion in cash for Wiz, less than a year after its abortive first attempt to acquire the business fell apart amid antitrust concerns.
Yes, Google substantially raised its offer from the original $23 billion to $32 billion, and it drastically increased the break clause fee to $3.2 billion. But according to sources who spoke to Reuters, the real clincher was the fact Donald Trump is now in the White House. Or, perhaps more accurately, because Joe Biden and his FTC chair Lina Khan were out.
The individuals told the news wire that while Google had looked for a second time at buying in Wiz last fall, it was only after January 20th that the pace of talks ratcheted up, leading to the deal being signed this week. It’s also believed that Fazal Merchant, who joined Wiz as its new Chief Financial Officer in January, played a key role in getting the deal over the line.
Google Seems Confident Despite Pending Antitrust Cases
The staggeringly high breakup fee – which Google would have to pay Wiz if the deal fails – reflects the tech giant’s confidence that the deal will go through under new Federal Trade Commission (FTC) boss Andrew Ferguson. His appointment, as well as that of Gail Slater to lead antitrust reviews at the Department of Justice (DOJ), are thought to have significantly eased concerns about regulatory reviews.
The FTC under Biden-era chair Khan appears very different to the agency under the new Trump-appointed Ferguson today. Khan became the bane of big tech, fighting Silicon Valley’s most powerful names over antitrust issues.
A year ago the FTC opened investigations into three separate tech mega deals – Microsoft’s (MSFT) $13.75 billion investment in OpenAI, the $8 billion Amazon (AMZN) and Anthropic deal, and Alphabet’s $2.55 billion also with Anthropic.
Ferguson is seen as taking a lighter-touch approach to mergers and acquisitions than his predecessor, but the Wiz deal will be a test of the agency’s outlook.
Google is running the regulatory gauntlet as it still faces two antitrust lawsuits. In one relating to its search business a judge has already said it has a monopoly, with the DOJ proposing that it sell its Chrome browser as remedy. In another, where Google is awaiting the verdict, the Justice Department alleged it has an unlawful grip on the ad technology market.
“It’s going to be a great litmus test and bellwether for M&A in 2025,” Brad Haller, senior partner for mergers and acquisitions at consulting firm West Monroe, told CNBC.
Is Google Still a Good Buy?
According to analysts, Google stock is a Moderate Buy, with 25 Buy ratings and 11 Hold ratings given by analysts in the past 3 months. The average GOOGL price target is $215.33, implying an upside of about 34%.
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