Palo Alto Networks to Buy CyberArk in $25 Billion Deal

Signage outside Palo Alto Networks headquarters in Santa Clara, California. (David Paul Morris/Bloomberg)

Palo Alto Networks agreed to acquire CyberArk Software in a deal worth $25 billion, the two cybersecurity companies announced Wednesday.

CyberArk shareholders will receive $45 in cash and 2.2005 shares of Palo Alto common stock for each CyberArk share they own. The deal is expected to close in the second half of Palo Alto’s fiscal 2026.

Palo Alto stock was falling 7.9% after the announcement, making it the worst performer in the S&P 500 and the NASDAQ 100, according to Dow Jones Market Data. Shares declined 5.2% on Tuesday when The Wall Street Journal first reported that the two companies were nearing a deal.

CyberArk stock was down 2.2% after soaring 13% the day prior. The Israeli company had a market capitalization of around $19 billion before Tuesday’s reports.

The acquisition marks Palo Alto’s entry into the identity security market. The company views securing credentials for both human and machine identities, such as artificial-intelligence agents, as the most critical challenge for enterprises.

“Our market entry strategy has centered around the fundamental belief that the best time to enter a category is at the inflection point,” Palo Alto CEO Nikesh Arora wrote in a letter to shareholders. “We are witnessing another inflection point driven by the emergence of AI agents, creating new AI security categories and reshaping the way Identity Security is delivered.”

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

Palo Alto has been looking for acquisitions to build out a one-stop-shop for cybersecurity solutions, Dan Ives of Wedbush Securities said in a research note Wednesday. Despite the selloff Tuesday and Wednesday, the deal is “a strategic home run,” Ives wrote, calling CyberArk the top player in the privileged access management category.

Wedbush has an Outperform rating and $225 target price on Palo Alto shares. Wedbush Fund Advisers last month launched the Dan IVES Wedbush AI Revolution exchange-traded fund, which holds Palo Alto stock.

Write to Nate Wolf at nate.wolf@barrons.com