BlackBerry to acquire AI-powered cybersecurity startup Cylance for $1.4 billion

The rumors, it seems, were true — BlackBerry is acquiring cybersecurity startup Cylance in an all-cash deal worth $1.4 billion.
Founded in 2012 by CEO Stuart McClure — an entrepreneur who sold a previous cybersecurity firm to McAfee for $86 million in 2004 — Irvine, California-based Cylance is an endpoint protection platform designed to thwart advanced threats using artificial intelligence (AI). Its suite of security protocols inspects networks for weaknesses and shuts them down if detected, and it doesn’t require a “signature” from an existing threat to block it — it can spot new threats.
The company had raised a hefty $300 million since its inception, including a $120 million chunk a few months ago, and it also recently expanded into the consumer market.
Since BlackBerry’s exit from the consumer hardware realm, the Canadian company has doubled down on the enterprise, with a particular focus on security. So buying Cylance is entirely in line with its previously stated mission. Indeed, BlackBerry said it plans to leverage Cylance to bolster its Spark Enterprise of Things (EoT) platform, and more specifically its UEM and QNX products.
“Cylance’s leadership in artificial intelligence and cybersecurity will immediately complement our entire portfolio, UEM and QNX in particular,” BlackBerry CEO John Chen said in a press release. “We are very excited to onboard their team and leverage our newly combined expertise. We believe adding Cylance’s capabilities to our trusted advantages in privacy, secure mobility, and embedded systems will make BlackBerry Spark indispensable to realizing the Enterprise of Things.”

Big market

Global cybersecurity is estimated to be a $232 billion industry by 2022, up from around $138 billion last year, though there will reportedly be a cybersecurity workforce shortfall of 1.8 million by that point. As such, there has been a wave of investment and acquisitions across the industry.
In the past year alone, network security company Barracuda went private as part of a $1.6 billion acquisition, AT&T acquired threat intelligence company AlienVault, Cybersecurity startup PhishMe was acquired for $400 million by a private equity consortium, Symantec recently snapped up Appthority and Javelin Networks to bolster its mobile and enterprise security products, and AI-powered cybersecurity platform CrowdStrike raised $200 million at a $3 billion valuation.
Elsewhere, there have been at least two notable IPOs for cybersecurity companies this year, with both Zscaler and Carbon Black electing to go public. Judging by Cylance’s recent raises and position as a late-stage venture, it likely had at least one eye on an IPO in the not-too-distant future. BlackBerry has apparently chosen to strike before Cylance’s public plans reached an advanced stage.

Exit 2

This latest deal represents the second notable exit for McClure, though at well north of $1 billion, it eclipses his previous sale back in 2004 nearly twentyfold.
BlackBerry said it expects to close the deal before the end of February, 2019, at which point Cylance will operate as an independent unit within BlackBerry.
“Our highly skilled cybersecurity workforce and market leadership in next-generation endpoint solutions will be a perfect fit within BlackBerry, where our customers, teams, and technologies will gain immediate benefits from BlackBerry’s global reach,” added McClure. “We are eager to leverage BlackBerry’s mobility and security strengths to adapt our advanced AI technology to deliver a single platform.”
Source: VentureBeat
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