XM Cyber Sells Technology to CrowdStrike Amid Mass Layoffs
Translated & summarized from Calcalist by baba
Israeli cybersecurity firm XM Cyber is selling its technology to CrowdStrike, resulting in the dismissal of most of its 300 employees in Israel. The deal, valued at $600 million including stock, involves CrowdStrike acquiring XM's code and patents but not its customer base or revenue. XM Cyber, founded in 2016 and previously sold for $700 million in 2021, is now undergoing restructuring. CrowdStrike continues its acquisition spree in the Israeli cybersecurity sector.
The story in 5 lines · by baba
- XM Cyber is selling its technology to CrowdStrike, laying off most of its 300 Israeli employees.
- The deal is valued at $600 million, including cash and stock issued to XM shareholders.
- CrowdStrike is acquiring XM's technology and patents, but not its revenue or customers.
- XM Cyber was previously sold for $700 million in 2021 to the German Schwarz Group.
- CrowdStrike is also in talks to acquire another Israeli cybersecurity startup, Orion, for $500 million.
Israeli cybersecurity firm XM Cyber is selling its intellectual property to CrowdStrike, with most of its Israeli workforce already dismissed. Out of approximately 300 employees in Israel, only 50 remain to manage existing client relations. Since the initial announcement of the technology sale in July, XM has conducted extensive layoffs. The company, which employed 400 people globally (75% in Israel), is attempting to frame the deal as a $600 million "glamorous exit." However, the reality appears different, with CrowdStrike acquiring only XM's technology and patents, not its revenue streams or customer base.
CrowdStrike, the world's second-largest cybersecurity firm after Palo Alto Networks, announced in July its acquisition of XM's technology for an "insignificant" sum. The cash portion of the deal was $145 million, but CrowdStrike also issued 2.1 million shares to XM's shareholders. This share issuance brings the total value of the exit to $600 million. The shares were distributed to XM's shareholders, notably the German company Schwarz Group, which had purchased the Israeli startup for $700 million at the peak of the market in 2021. XM's stock has reportedly seen gains since the deal's closure.
XM Cyber was founded in 2016 by former Mossad chief Tamir Pardo, Noam Erez, Boaz Gorodissky, and businessman Shaul Shani. Pardo is no longer involved with the company. Erez currently serves as CEO and Gorodissky as CTO. The company developed technology for simulating cyberattacks and identifying attack vectors. The founders and early investors achieved a rapid and high return on investment, as XM was sold for $700 million in 2021 after raising $48 million. The current sale suggests that the Schwarz Group, which lacks specialization in technology and is primarily a large retail chain, was unable to effectively leverage XM's operations after its 2021 acquisition.
CrowdStrike is reportedly in negotiations to acquire another Israeli cybersecurity startup, Orion, for approximately $500 million. This follows a series of recent acquisitions by CrowdStrike of Israeli companies, including Seraphic Security for $400 million this year, Adaptive Shield and Flow Security for a combined $700 million in 2024, and Bionic for $350 million in 2023. XM's remaining employees may continue working with the technology under a license from CrowdStrike.
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