Arctic Wolf has acquired Cylance, BlackBerry's struggling cybersecurity business, for $160 million. That's a steep discount from the $1.4 billion BlackBerry paid to acquire the startup in 2018.
Under the terms of the transaction, which is expected to close in BlackBerry's fiscal fourth quarter, BlackBerry will sell Cylance assets to Arctic Wolf for $160 million in cash. BlackBerry will receive approximately $80 million at closing and the remaining tranche after one year, as well as approximately 5.5 million shares of Arctic Wolf common stock.
“We believe this transaction is a win-win for our shareholders and all other stakeholders,” BlackBerry CEO John Giammatteo said in a statement. “Our customers will appreciate the continuity of service and expertise provided by a global cybersecurity leader like Arctic Wolf. Finally, Arctic Wolf is leveraging its scale to build and grow its Cylance business. will benefit as a portfolio reseller to large government customers and as a shareholder in the company.”
Nearly eight years ago, BlackBerry, once known for its keyboard-equipped smartphones, touted its acquisition of Cylance as a key piece of its pivot into enterprise services. This was BlackBerry's largest M&A deal to date, and was an all-cash deal, with Cylance integrating its technology with BlackBerry's existing platform but largely continuing to operate as an independent business unit.
But Cylance, founded in 2015 by former McAfee and Intel duo Stuart McClure and Ryan Palme, has struggled to maintain its foothold in the increasingly crowded cybersecurity field. The company's AI-powered cyber threat analysis software has been slowly losing ground to competitors. According to IDC, Cylance's share of the endpoint security market in 2022 was just 1.3%. (Endpoint security refers to protecting devices such as desktops, laptops, and mobile devices.)
Giammatteo blamed part of Cylance's failure on the market's shift to threat detection and response products, which Cylance does not offer. “Cylance [would require] We are making significant investments to accelerate growth,” he said during a recent BlackBerry earnings call.
Cylance has also been a major loss for BlackBerry's broader cybersecurity division, posting a record $51 million loss for the fiscal year ending February 28, 2025. Earlier this year, BlackBerry CFO Tim Foote said the company would consider redirecting spending from Cylance and other companies. Expensive areas to grow more profitable sectors, such as secure communications.
Investors seem to approve, too. BlackBerry stock was up nearly 16% as of noon ET.
Dan Schiappa, Arctic Wolf's CPO, said in a blog post that Cylance's approach to endpoint security is “fundamentally unique” and that it allows Arctic Wolf to provide “innovative, expanded, and sophisticated “endpoint security solutions” will be brought to market.
“For Cylance customers, the endpoint security products they rely on every day will not only continue to be fully supported, but will also benefit from Arctic Wolf's resources and expertise,” Schiappa said. Masu. “Endpoint security is a key corporate priority for us, and Arctic Wolf, one of the leading platform companies in the cybersecurity space, is committed to providing the resources needed to take Cylance's endpoint offering to the next level. We are uniquely equipped to deliver innovation and expertise.”
Cylance is Arctic Wolf's sixth acquisition since its founding in 2012. The company's other companies include secure intelligence platform RootSecure, threat hunting platform RankSoftware, security training startup Habitu8, digital forensics company Tetra Defense, and security orchestration software developer Revelstoke.