UPDATED 20:01 EST / NOVEMBER 19 2020


Blackstone invests $400M in cybersecurity firm FireEye

Cloud cybersecurity firm FireEye Inc. saw its stock jump more than 17% in late trading today after announcing a $400 million investment from the private equity firm Blackstone Group.

Blackstone will also grab a seat on the FireEye’s board of directors, the company said.

Blackstone, which is based in New York, is considered to be one of the most powerful private equity firms in the world, with a market cap of more than $67 billion. In the announcement, it said it’s teaming up with a venture capital firm called ClearSky Power & Technology Partners to purchase $400 million worth of convertible stock in FireEye.

FireEye said they will buy “shares of a newly designated 4.5% Series A Convertible Preferred Stock of FireEye,” at a purchase price of $1,000 per share. The convertible stock can later be converted to common stock at the price of $18 per share, FireEye added. Viral Patel, a senior managing director at Blackstone, will take a seat on FireEye’s board of directors.

“Blackstone and FireEye have a shared vision of the unique role FireEye can play in addressing the increasingly sophisticated cybersecurity challenges their customers face,” Patel said. “We are excited to partner with the company’s board and management to accelerate execution on their vision.”

Neither party is divulging on what the exact vision might be at this time, but whatever it is, it involves a smaller company called Respond Software Inc. That’s because FireEye announced separately that its planning to acquire the four-year-old security startup for $186 million in cash and stock.

It said that the proceeds of the convertible offering will be put toward that purchase. In addition, the money from Blackstone will also be used to “accelerate the growth of the company’s cloud, platform and managed services portfolio,” FireEye said.

Respond sells what it likes to call an “eXtended Detection and Response” platform, or XDR for short. According to FireEye, the XDR platform helps to accelerate cyber investigations and responses. It does so by “automating the correlation of multi-sourced attack evidence using cloud-based data science models that ingest data from a comprehensive set of security technologies.”

The plan is to integrate the XDR platform with FireEye’s Mandiant Advantage offering, which is a software-as-a-service-based threat intelligence tool that the company debuted last month.

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE that FireEye’s acquisition of Respond Software is further consolidation in the cybersecurity sector, and pushes the machine learning frontier out further within it.

“This acquisition would not have been possible without this capital infusion from Blackstone,” Mueller said. “As long as external capital wants to invest into enterprise software, we will see further consolidation like this.”

Image: FireEye

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