Brokerage firm warns Google's $5.4B deal with Mandiant may face 'protracted' review

If it gets the regulatory go-ahead, Google's acquisition of cybersecurity firm Mandiant will be its second largest bit of M&A business since it forked out $12.9 billion for Motorola back in 2012.

At an agreed price of $23 per share, Google values Mandiant at $5.4 billion. That's more than double the amount Google paid for business intelligence specialist Looker in 2019 and overshadows its $2.1 Fitbit acquisition last year. The nearest big deal value, as pointed out by broker house MKM Partners, is the $3.2 billion it shelled out for Nest in 2014.

MKM Partners also warns that Google's attempt to burnish its cybersecurity credentials and further beef up Google Cloud – to better challenge AWS and Microsoft – "could face a protracted regulatory review process in light of the overall antitrust scrutiny that Google is facing."

Figure 1: Alphabet HQ in Mountain View, CA.
(Source: Askar Karimullin/Alamy Stock Photo)

Google is not only having a hard antitrust time in Europe but in the US where parent company Alphabet is accused of abusing its market power in the online search business.

MKS Partners also refers to possible "implications" for Mandiant's partner program, which includes relationships with Microsoft and AWS. Mandiant seemed to make the case that this would not be affected if the Google buyout went ahead. In an FAQ document, cited by MKM Partners, Mandiant said, "Google Cloud is deeply committed to supporting its partner ecosystem, and this acquisition will enable partners to offer broader solutions to customers."

The Google press release said the transaction was expected to close "later this year," which MKM Partners reckoned was a "fairly wide time frame" and perhaps recognition that it doesn't expect regulatory plain sailing either. MKM Partners ruefully pointed out that the Fitbit acquisition took roughly 14 months to close.

It's good for you, it's good for us

Top execs from both Google and Mandiant predictably talked up the benefits of having the cybersecurity firm's capabilities sit within Google Cloud.

Kevin Mandia, founder and CEO of Mandiant – as quoted by the Financial Times – said Google resources and AI capabilities would ease the strain of finding enough trained people. "We have a massive shortage of [cybersecurity] expertise on the planet," he added.

"Organizations around the world are facing unprecedented cybersecurity challenges as the sophistication and severity of attacks that were previously used to target major governments are now being used to target companies in every industry," said Google Cloud CEO Thomas Kurian, CEO in prepared remarks.

"We look forward to welcoming Mandiant to Google Cloud to further enhance our security operations suite and advisory services, and help customers address their most important security challenges."

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— Ken Wieland, contributing editor, special to Light Reading