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TOW: Palo Alto Networks Acquires CloudGenix For $420 Million

Palo Alto Networks (PANW), a large cybersecurity vendor, has announced an agreement to acquire software-defined wide-area networking (SD-WAN) provider CloudGenix for $420 million. CloudGenix had previously raised $99 million in four rounds of funding. York IE has chosen to highlight this transaction because we believe it is a good example of the evolution of security and networking, as well as an interesting view of a strategic acquisition.

SD-WAN is used by enterprises to connect and manage network traffic at branch offices. CloudGenix’s solution has a security focus within this larger framework and, “Helps customers stay secure by setting policies to enforce compliance with company security protocols across distributed locations.”

Nikesh Arora, chairman and CEO at Palo Alto Networks, said CloudGenix’s product will be integrated into Prisma Access, Palo Alto’s secure access service edge (SASE) platform. The goal is to offer secure access to the cloud for branch offices and mobile users with a scalable, cloud-native architecture.

This acquisition is an example of how security has become integral to all parts of IT infrastructure, and vendors are starting to move beyond their core products to incorporate holistic solutions. Palo Alto Networks, maybe best known for their advanced firewalls, has used M&A to add and accelerate their product suite. In the last year the company has spent over $1.6 billion on acquisitions for a range of software solutions.

York IE sees this trend continuing with large security and infrastructure vendors increasing the breadth of their platforms and meshing several sub sectors together. This in an opportunity for entrepreneurs to find product gaps in the larger platforms, but also a hurdle to any startup competing directly against a larger platform. Many enterprises will choose to reduce the number of vendors they procure from to simplify their infrastructure, especially with regards to their cybersecurity tools.

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