US’s Proofpoint buys firm that flags insider cybersecurity leaks for $225m

Acquisition of ObserveIT is the third for Proofpoint in Israel; the Israel-founded firm has raised $53 million from investors to date

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

ObserveIT's team in Israel (Yair Grindlinger)
ObserveIT's team in Israel (Yair Grindlinger)

US cybersecurity firm Proofpoint, Inc. said Sunday it has agreed to buy Israeli founded ObserveIT, a maker of software that identifies insider cybersecurity threats, for $225 million in cash.

The acquisition will allow Proofpoint to “extend its data loss prevention (DLP) capabilities,” to better protect enterprises from cyber-attacks, the firm said in a statement.

The Boston-based ObserveIT, with a research and development center in Tel Aviv, was founded in 2006 by Gabriel Friedlander and Avi Amos. It has raised $53 million to date from investors including Bain Capital Ventures, Boston-based Spring Lake Equity Partners, and San Francisco-based VC firm NightDragon Security, according to Start-Up Nation Central, which tracks the Israeli tech industry. ObserveIT employs 150 people, 70 of them in Israel.

The combination of the capabilities of the two firms will “give enterprises unprecedented insights into user activity with their sensitive data, wherever it resides,” the statement said.

The US firm will also invest funds to further develop ObserveIT’s main insider threat management software, which helps security teams to detect, investigate, and prevent potential insider threat incidents by delivering real-time alerts and actionable insights into user activity in one easy-to-use solution, the statement said.

“Today’s ObserveIT acquisition underscores Proofpoint’s commitment to providing organizations with people-centric cybersecurity and compliance solutions that protect what matters: their people and the data they have access to, in a post-perimeter, cloud-first world,” said Gary Steele, chairman of the board and chief executive officer of Proofpoint. “Defending data requires the ability to detect risky insider threat behavior and risky user activity, and swiftly mitigate risk across cloud apps, email, and endpoints.”

This is the third acquisition by Proofpoint in Israel in the last three years. The firm acquired FireLayers, focused on cloud security, in 2016, and MetaNetworks, which secures access networks in May this year. This latest deal brings the total amount invested by Proofpoint in Israeli technologies through these three transactions to $400 million.

More than 99 percent of today’s cyberattacks use human interactions to gain access to internal systems, and criminals increasingly target companies through their employees, the statement said.

With more and more users accessing data from endpoints off the corporate network by using their iPhones or cloud apps or email, organizations need to ensure they have effective security controls in place to understand how, when, and where users interact with critical data and intellectual property.

The integrated software will deliver real-time detection of anomalous interactions between people, data, devices, and applications, allowing security teams to understand and respond to data that is flagged as being mishandled.

The Sunnyvale, California-based Proofpoint has developed software to help firms protect their assets by protecting their employees at their entry points. The firm was founded by Eric Hahn in 2002. It employs more than 2,500 employees serving over 4,000 enterprises worldwide, according to the company website.

Proofpoint went public on the NASDAQ in April 2012, and reported revenues of $717 million in 2018.

The closing of the transaction is expected in the fourth quarter of 2019, the US firm said, subject to closing conditions and regulatory approvals, the statement said.

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