Microsoft Corporation (MSFT) Entering Cyber Security Field with New Acquisition

Microsoft Inc. (NASDAQ:MSFT) has reportedly indicated its plan to buy the Israeli cyber security company, Adallom, for $320 million. Adallom is headquartered in Palo Alto, California with its Israeli offices located in Tel Aviv’s Ramat Hahayal. Neither Adallom nor Microsoft has yet to comment on the reported acquisition.

Founded in 2012 by three former Israeli Intelligence Corps members and Israeli Defense Forces technology unit graduates, Assaf Rappaport, Ami Luttwak, and Roy Reznik, Adallom develops cloud security platforms and provides companies with technology to safeguard data located on remote servers. Adallom serves as a third-party security network, sifting through a company’s organizational information and sending out an alert if it suspects that privileged use has been compromised.

Adollam currently has 80 employees, with 50 of them based in the Tel Aviv office. Almost all of the staff is data security professionals and graduates of technological intelligence units, enabling them to provide unique perspectives on cyber security.

To date, Adallom has raised an extraordinary $49.5 million in investments. In April alone the company raised $30 million including an investment from technology giant Hewlett-Packard. The company’s customers include SAP SE, LinkedIn Corp., and Netflix Inc.

The sale of the Israeli company to Microsoft is particularly interesting as it was Adallom which in December 2013 first exposed the security breach in Microsoft Office365’s server. For Microsoft, having Adallom as part of their portfolio brings that saga full circle and recognizes the ingenuity and uniqueness of the technology that recognized a breach in their own company a couple years ago.

This purchase would not be Microsoft’s first in Israel. In fact, the U.S. technology giant made several recent acquisitions in Israel including a reported $200 million for security software developer Aorato. Microsoft also bought text analysis firm Equivio and the technology of digital pen maker N-trig.

According to individuals familiar with the buyout, Microsoft intends to keep Adallom’s Israeli headquarters and use the facility as the center of their cyber security division in Israel.

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