Palo Alto Networks Inc ( PANW ) shares are trading lower Wednesday after the company announced an agreement to acquire CyberArk Software ( CYBR ) .

What Happened: Palo Alto entered into a definitive agreement with CyberArk to acquire the identity security company. Shareholders of CyberArk will receive $45 in cash and 2.2005 shares of Palo Alto common stock for each CyberArk share held for an approximate equity value of $25 billion.

Palo Alto said the combination will bring expertise in Identity Security and Privileged Access Management to Palo Alto’s comprehensive AI-powered security platforms with the aim of extending privileged identity protection to all identity types.

“Today, the rise of AI and the explosion of machine identities have made it clear that the future of security must be built on the vision that every identity requires the right level of privilege controls, not the ‘IAM fallacy,'” said Nikesh Arora, chairman and CEO of Palo Alto Networks ( PANW ).

“CyberArk is the definitive leader in Identity Security with durable, foundational technology that is essential for securing the AI era. Together, we will define the next chapter of cybersecurity.”

The transaction is expected to be immediately accretive to Palo Alto’s revenue growth and gross margin. The company also expects the deal to be accretive to free cash flow per share in fiscal 2028.

Both boards of directors have unanimously approved the transaction, which is expected to close during the second half of fiscal 2026.

CyberArk shares jumped 13.5% on Tuesday following reports that the two cybersecurity companies were in talks regarding a potential acquisition.

PANW Price Action: Palo Alto shares were down 5.8% at $182.48 at the time of publication Wednesday, according to Benzinga Pro.

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