Microsoft Corp. is reportedly finalizing a deal to acquire CyberX Inc., a venture-backed startup that provides security software for industrial equipment and other connected devices.

Word of the negotiations emerged via Israeli media reports published over the last two days. The acquisition is believed to be worth $165 million or $170 million and will reportedly also see Microsoft invest tens of millions of dollars more in CyberX’s employees, though details are slim on this component of the deal. 

More information could emerge as early as this week. An official announcement is reportedly expected in the next few days, with Microsoft and CyberX now said to be waiting on the startup’s investors to sign off on the deal.

Seven-year-old CyberX sells a cybersecurity platform that can pinpoint security issues in large fleets of connected devices. The startup mainly focuses on industrial control systems used in factories to orchestrate production. CyberX has raised more than $48 million in funding from investors including Northwestern Venture Partners and claims that it protects more than 1,200 industrial control systems worldwide, more than any other competitor.

The startup’s platform maps out all the connected devices in a factory or corporate network to give administrators a high-level view of potential risks. CyberX displays unmanaged systems previously overlooked by the information technology team, equipment running on outdated firmware and, not least, malware. Its detection algorithms spot threats by looking for system activity that deviates from a device’s normal behavior.

Buying CyberX would enable Microsoft to add more depth to its growing portfolio of “internet of things” security products. The company recently launched Azure Sphere, a toolkit for building hacking-resistant connected devices that includes a Linux distribution, cloud-based security features and specialized chips. Azure Security Center, a solution that helps companies protect hybrid cloud environments, also includes features for applying security policies to connected devices.

Photo: Microsoft