In the wake of its recent massive security breach, Facebook Inc (NASDAQ:FB) is looking to acquire a cybersecurity firm before the end of the year in a bid to protect itself and its users, per a report in The Information.
Facebook has reportedly contacted a number of cybersecurity firms about a possible acquisition, according to sources cited in the story.
The move to bolster its security comes weeks after the social media giant reported that data for as many as 30 million of its users had been hacked as part of a giant security breach.
“Whereas no specific target (large or small, private or public) has been named or identified, it would appear that Facebook’s recent sizeable network breach (30m users impacted) has elevated concerns internally and externally,” wrote Shaul Eyal and Tanner Hoban, Oppenheimer analysts in a note to investors.
READ: Facebook hires former UK deputy Prime Minister as top communications executive
But questions linger about what Facebook would gain by taking over a cybersecurity firm. And Oppenheimer’s Eyal and Hoban point out that past security related transactions such as Google’s $625 million acquisition of Postini back in 2007 haven’t been “characterized as overly successful (to put it mildly)".
“Does Facebook wish to provide its users with an elevated level of security? Is the potential transaction being driven by the board of directors, under some pressure? Does Facebook wish to become a security player?” are some of Eyal and Hoban’s immediate questions in response to the news.
On the list of potential takeover targets are Palo Alto Networks (NYSE:PANW), Fortinet (NASDAQ:FTNT) and Check Point Software Technologies (NASDAQ:CHKP), which could all bolster the security of Facebook’s platform, according to Eyal and Hoban. Other names in the frame include Cyberark Software (NASDAQ:CYBR), Sailpoint Technologies Holdings Inc (NYSE:SAIL) and Okta (NASDAQ:OKTA) as these companies could address the “heightened importance of identity”.
Potential acquisition targets might have the “upper-hand” when it comes to valuations in the competitive cyber-security sector, point out Eyal and Hoban.
And the solutions to Facebook’s security breach could also be addressed by a “handful of vendors offering various levels of platforms,” they say.
Contact Ellen Kelleher at ellen@proactiveinvestors.com