Palo Alto Networks To Acquire Israeli Cybersecurity Startup Demisto For $560M

Palo Alto Networks, an Israeli-founded cybersecurity company based in Santa Clara, California, announced its intention to acquire Israeli startup Demisto, focused on security orchestration, automation, and response (SOAR), for some $560 million in cash and stock.

The acquisition is expected to close during Palo Alto ‘s fiscal third quarter subject to regulatory approvals, the company said in a statement.

With offices in Tel Aviv and Cupertino, California, Demisto was founded in July 2015 by CEO Slavik Markovich (formerly of Intel Security, McAfee and co-founder and CTO of Sentrigo), VP marketing Rishi Bhargava (formerly of Intel Security, McAfee and Solidcore); VP products, Dan Sarel (formerly of Intel Security, McAfee, Sentrigo and Check Point); and VP engineering, Guy Rinat (formerly of Intel Security, McAfee and Sentrigo).

The startup developed a comprehensive incident management platform called Security Orchestration, Automation and Response (SOAR) that combines orchestration, incident management, and interactive investigation for integrated threat intelligence.

Demisto’s solutions “have helped reduce alerts that require human review by as much as 95 percent, allowing security teams to focus on the most complex threats,” the companies said.

Palo Alto indicated that the addition of Demisto’s orchestration and automation technologies “will accelerate Palo Alto Networks Application Framework strategy and serve as a critical step forward in the company’s aim to deliver immediate threat prevention and response for security teams.”

Markovich said the Demisto team has been dedicated “to the challenge of automation because we believe that relying on people alone to combat threats will fail against the scale of today’s attacks.

“Palo Alto Networks strategy resonates with our own vision. And we have found a like-minded team that shares our conviction that the future of security is all about automation and AI. We’re thrilled to be joining them to help make it a reality,” he added.

Nikesh Arora, chairman and CEO of Palo Alto Networks said, “coupled with our Application Framework, Demisto will help us strengthen our commitment to security teams by delivering a platform that provides higher levels of integration, automation, and innovation to prevent successful cyber attacks.”

Demisto’s solutions will continue to be available to its 150 customers, including large organizations in healthcare and financial services. Demisto said it plans to continue executing its “aggressive growth plans and leverage Palo Alto Networks distribution to achieve its ambitious goals.”

The startup’s founders are set to join Palo Alto Networks, according to the announcement.

Palo Alto Networks was founded by Israeli entrepreneur Nir Zuk in 2005. Over the past decade, the company has acquired a number of Israeli cybersecurity startups including Cyvera for some $200 million in 2014. and LightCyber in 2017 for a total of $105 million.

In 2018, Palo Alto opened a new office and research and development center in Tel Aviv near the Hashalom train station, its only R&D site outside of its Santa Clara global headquarters.

Palo Alto’s intended acquisition of Demisto is the second big announcement in the Israeli cyber technology scene in less than 10 days.

Last week, global cybersecurity firm Symantec announced the acquisition of Luminate Security, an Israeli startup that developed a software-as-a-service platform focused on hybrid environments, for a reported $200 million.

Headlines in recent months have also focused on Israeli cybersecurity startups raising significant capital.

In 2018, Israeli cybersecurity companies and startups drew some 20 percent of the overall cyber investments worldwide, second only to the US.

Over the course of last year, Israeli cybersecurity companies raised over $1 billion equity investment in 117 funding rounds, setting a new record and marking a 47 percent increase from 2017, according to a report on Israel’s cyber sector published last month by Start-Up Nation Central (SNC).