Cybersecurity company SentinelOne (NYSE: S) recently announced a blockbuster deal to acquire identity security company Attivo Networks for $616.5 million in cash and stock. The deal's size is notable, representing 6% of SentinelOne's roughly $10 billion market cap.
Large mergers can be concerning; they sometimes backfire on management when the pieces don't go together well. However, I'll explain why I don't think investors should have that fear. Here's why SentinelOne's move was a wise decision, and what it means for the company's future.
Attivo Networks is a cybersecurity company that specializes in identity security. Windows operating systems have what's called the "Active Directory (AD)." It's like a master key that enables system administrators to control access to items on a network. If your work computer is accessing a network printer or a particular folder, the AD is there to verify that you're supposed to access these features. Otherwise, you would be denied.
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What SentinelOne's Big Deal Means for Investors