Palo Alto Networks to buy Israeli cybersecurity firm Demisto for $560 million

Demisto was founded in 2015 and develops enterprise security solutions; its four founders will join the Palo Alto Networks team

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Illustrative image of a handshake (iStock by Getty Images)
Illustrative image of a handshake (iStock by Getty Images)

Palo Alto Networks, a Santa Clara, California-based cybersecurity firm founded by Israeli entrepreneur Nir Zuk, said in a statement Tuesday that it has entered an agreement to buy Israel’s Demisto for some $560 million in cash and stock.

Demisto, with offices in Tel Aviv and Cupertino, California, was founded in 2015 by Slavik Markovich, Rishi Bhargava, Dan Sarel and Guy Rinat, who will now join Palo Alto Networks.

The Israeli firm develops enterprise security solutions that combine incident management, machine learning and interactive investigation, according to Start-Up Nation Central’s database, which tracks the industry. Its interactive investigation feature allows the collaborative investigation of complex incidents that can’t be solved through standard means, the firm’s website says. A virtual war room allows people to collaborate and run security commands.

Palo Alto Networks said the Israeli firm’s technologies will accelerate Palo Alto’s strategy “and serve as a critical step forward in the company’s aim to deliver immediate threat prevention and response for security teams.”

Palo Alto Networks founder & CTO Nir Zuk (YouTube Screenshot)

Demisto had raised $69 million to date from investors including Accel Venture Capital, Greylock Partners, ClearSky and Slack, according to Start-Up Nation Central’s database.

The Israeli startup’s automated tools have helped reduce alerts that require human review by as much as 95 percent, Palo Alto said, “allowing security teams to focus on the most complex threats.”

“This well-developed approach will bring Palo Alto Networks closer to using AI and machine learning to help further automate significant parts of the company’s customers’ security operations,” the statement said.

Demisto has more than 150 customers, a quarter of which are in the Fortune 500, including large organizations in healthcare, high technology, financial services and other industry verticals, the statement added.

The Israeli firm will continue its growth plans and use Palo Alto Networks distribution channels to do so, the statement said, while its team will also work closely with the Palo Alto Networks team to help integrate its products within those of the acquirer.

“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 cyberattacks,” Nikesh Arora, chairman and CEO of Palo Alto Networks, said in the statement.

Demisto’s products will continue to be available to customers and partners after the transaction closes, the statement said.

The proposed acquisition is expected to close during Palo Alto Networks’ fiscal third quarter, the statement said, subject approvals and closing conditions.

Palo Alto has acquired three Israeli companies to date, Calcalist website reported — Cyvera Ltd. in 2014, Lightcyber Ltd in 2017, and Cyber Secdo Ltd., also known as Secdo, in 2018.

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