CyberArk has recently been acquired by Palo Alto Networks for $25 billion (£18.81 billion), in a bid to create an end-to-end security platform for the AI era.
The acquisition of the Israeli-based identity security company by Palo Alto Networks – despite showing promise in boosting both of their cybersecurity offerings – saw the American cybersecurity company's stock plunge, with market observers questioning the timing of the merger.
An Overview of the M&A Deal
Under the agreement, CyberArk shareholders will receive $45.00 (£33.86) in cash and 2.2005 shares of Palo Alto Networks stock per share, valuing CyberArk at approximately $25 billion (£18.81 billion)—a 26% premium to its 10-day average Volume Weighted Average Price (VWAP).
This acquisition marks Palo Alto Networks' strategic entry into identity security, enhancing its multi-platform approach. The deal combines CyberArk's leadership in identity security and privileged access management with Palo Alto Networks' AI-driven platforms, expanding protection across human, machine, and autonomous AI identities.
Moreover, the partnership aims to accelerate CyberArk's evolution into a complete identity security platform, delivering stronger, integrated security outcomes.
Understanding the Unified Strategy
In a press release, Palo Alto Networks announced that it will integrate CyberArk's Identity Security Platform with its offerings to accelerate a unified platform strategy, closing security gaps and simplifying operations.
CyberArk's capabilities will be embedded into Palo Alto's Strata™ and Cortex® platforms, enabling AI-powered, identity-aware protection. This move disrupts legacy identity and access management (IAM) by extending robust privilege controls to every identity.
'As Agentic AI rises, the combined solution enforces least privilege and just-in-time access for secure automation. Together, the companies will deliver a comprehensive security portfolio, helping customers confidently embrace AI and digital transformation,' the company said in a press statement.
'Defining The Next Chapter of Cybersecurity'
Nikesh Arora, Chairman and CEO of Palo Alto Networks, said that their move to acquire CyberArk aligns with their market entry strategy of entering categories at their inflexion point, and that they believe that 'the moment for identity security is now'.
'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. CyberArk is the definitive leader in Identity Security, offering durable, foundational technology essential for securing the AI era. Together, we will define the next chapter of cybersecurity,' Nikesh explained.
Meanwhile, Udi Mokady, Founder and Executive Chairman of CyberArk, noted that this is 'a profound moment' in CyberArk's journey, adding that their merger with Palo Alto Networks marks a 'new chapter' for them, as they have shared values and a deep commitment to 'solving the toughest identity challenges.'
'Together, we'll bring unmatched expertise across human and machine identities, privileged access, and AI-driven innovation to secure what's next. This is more than a combination of technologies—it's an acceleration of the mission we began over two decades ago. I'm incredibly proud of what our team has built and deeply grateful to everyone who made this milestone possible,' Udi said.
Stock Plunges, Observers Questioning
Following the acquisition announcement, Palo Alto Networks' stock declined more than 5%, trading at $183.40 by midday Tuesday. The drop came after news of the potential merger surfaced, prompting investor concern. Meanwhile, CyberArk's stock initially dipped slightly to $431.50 but quickly rebounded, surging over 13% later in the day as investors reacted positively to the deal's terms and prospects.
Moreover, many market watchers have doubted the timing of the acquisition, with BMO Capital Markets analyst Keith Bachman noting that Palo Alto Networks has been concerned about the company's organic growth runway.
'In other words, if Palo Alto's underlying growth was flourishing, we are not so sure that management would be pursuing a (this) type of deal. Hence, on the spectrum of offensive vs. defensive, our initial reaction is defensive,' Keith said.
Meanwhile, RBC Capital analyst Matthew Hedberg had noted that Palo Alto Networks had typically shied away from large-scale mergers, and the size of the merger was a glaring sign for observers.
'Thus far, Palo Alto has stayed away from large-scale M&A and focused on tuck-ins, as a large deal would introduce execution and integration issues. Additionally, while CyberArk went through a subscription transition within the past few years, they still sell a mix of software-as-a-service and term-based subscriptions, while also delivering maintenance for on-prem contracts,' Matthew explained.
Current Financial Outlook
Palo Alto Networks, on the strength of its fiscal Q3 2025 results, delivered mid-teens revenue growth (~15.7 %) and non‑GAAP EPS up ~21.2 % year-over-year. Meanwhile, CyberArk posted robust Q1 2025 results with revenue of ~$318 million [~£239.25 million] (up ~43 %) and ARR of $1.215 billion [£915.54 million] (up nearly 50 %), exceeding guidance and generating solid free cash flow and margins.
CyberArk's standout financial momentum and rapid growth contrast with Palo Alto's more modest growth—but the acquisition could reset expectations if integration accelerates value creation.
