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Google's talks to buy Wiz sped up after Trump's

inauguration

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Google's sweetened offer, plus higher breakup fee, helped

clinch

deal

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Wiz had earlier considered IPO option

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On and off talks between two sides lasted nearly a year

By Anirban Sen and Krystal Hu

NEW YORK, March 18 (Reuters) - Less than a year after

Google's plans to acquire Israeli cybersecurity firm Wiz fell

apart, executives were able to ink a deal in a flurry of

negotiations after U.S. President Donald Trump was sworn into

office just eight weeks ago.

Google sweetened its original offer for $23

billion in July to $32 billion, making it one of the largest

tech deals ever, and dramatically upped the breakup fee to more

than $3.2 billion, people familiar with the agreement said. But

the real closer for Wiz and Google executives was the change at

the White House that brought with it the prospect of a

friendlier antitrust review under Trump, these people said.

Google made another pass last fall while Wiz considered a

potential IPO, these people said. While negotiations continued

sporadically over several months, executives started meeting

regularly to hammer out details of a deal after Trump's Jan. 20

inauguration and appointment of key antitrust officials in his

administration, these people said.

Fazal Merchant also joined Wiz as its new Chief Financial

Officer in January, while the company was still weighing a

potential initial public offering. Merchant played a major role

in shaping the deal, along with CEO Assaf Rappaport, helping to

get it across the finish line, one of the people said. Google's

cloud chief Thomas Kurian was also a key architect of the

agreement, two people said.

SWEETENED DEAL

Wiz executives found it hard to turn down Google's revised

offer, which valued the cybersecurity startup 39% higher than

the earlier bid, and also included a higher reverse breakup fee

of more than $3.2 billion, or over 10% of the deal value,

payable to Wiz if the deal falls through, the sources said.

Google sees the premium as justified given Wiz's 70% annual

revenue growth and over $700 million in annualized revenue,

according to a source familiar with the discussions.

Reverse termination fees, more commonly referred to as

breakup fees, are paid by buyers to compensate target companies

when deals fall apart due to regulatory reasons.

Such a high breakup fee is not common in corporate

dealmaking in the United States, even though such fees have been

on the rise in recent years as regulatory threats to large deals

have increased globally. According to a study by law firm

Fenwick & West, which reviewed deals worth at least $1 billion

that were signed in 2023, breakup fees on an average ranged

between 4% and 7% of the overall transaction value.

It is not clear if Google and Wiz approached U.S. antitrust

authorities prior to the signing of the deal.

Some companies have preemptively briefed U.S. antitrust

watchdogs to warm them up before signing a deal. For instance,

in 2023, Tempur Sealy sought the blessing of the U.S. Federal

Trade Commission before signing a $4 billion deal to acquire

Mattress Firm.

Wiz executives were wary after seeing Adobe's

attempted $20 billion takeover of Figma fall apart due to

antitrust scrutiny in late 2023, two people said. Google is also

currently battling two U.S. Department of Justice lawsuits over

its domination of online search and another about ad technology.

Google had offered to pay Wiz a breakup fee of about $2

billion at the time - a sum that Wiz felt was not high enough

for them to undertake the risk of signing the deal, the sources

said.

Some of Wiz's largest venture-capital backers were worried

that then-Federal Trade Commission Chair Lina Khan would tank

the deal, the sources said.

Trump's appointment of Andrew Ferguson to chair the FTC and

Gail Slater to helm antitrust reviews at Justice also gave

executives at both companies more confidence in a smoother

regulatory review, people familiar with the deal said.

Google, Wiz, the White House, and Justice officials did not

immediately respond to requests for comment.

Bank of America advised Google on the deal, while Goldman

Sachs advised Wiz.

(Additional reporting by Jody Godoy in New York and Steven

Scheer in Tel Aviv. Editing by Dawn Kopecki.)