Summary
Palo Alto Networks' chief executive held exploratory acquisition talks with both Okta and Datadog in advance of the company’s $25 billion agreement to buy CyberArk, and is now understood to be circling additional targets including Cribl and ClickHouse. Discussions with Okta advanced to product-level fit assessment but collapsed on price. An approach to Datadog was rebuffed and no offer followed. Palo Alto later completed the CyberArk purchase and paid $3.35 billion for Chronosphere, with those two deals contributing $338 million to the company’s $3 billion in revenue for the April quarter, the company said in June.
Background on the outreach
According to reports, Arora met with Okta CEO Todd McKinnon during a sequence of talks spanning late 2024 into early 2025. Participants assessed how Okta’s identity services might complement Palo Alto’s security offerings. The conversations progressed beyond introductory meetings, but ultimately failed to produce a transaction because the parties could not agree on price. At the start of last year Okta’s valuation was roughly $13.5 billion; it has since risen about 30 percent to sit near a $23 billion market capitalization.
Separately, in spring 2025 Arora contacted Datadog CEO Olivier Pomel to float a hypothetical acquisition while Datadog’s public valuation exceeded $40 billion. Pomel was not receptive and no formal proposal was advanced. Datadog’s market value has since roughly doubled to above $80 billion, reducing the practicality of an acquisition at the previously discussed scale.
Fallback strategy and completed deals
With the Okta and Datadog paths closed, Palo Alto pursued other targets. The company agreed in July 2025 to acquire CyberArk for $25 billion. In January 2026 it paid $3.35 billion to acquire Chronosphere, a smaller observability player focused on log data. Management reported that the CyberArk and Chronosphere purchases together contributed $338 million of the $3 billion in revenue Palo Alto posted for the April quarter, according to the company’s June statement.
Strategic rationale cited by executives and investors
Executives and investors cited a belief that artificial intelligence is altering the cyber threat environment, increasing executive-level attention and security budgets. The view is that AI agents can execute novel types of cyberattacks, elevating continuous system monitoring from a back-office IT task to a board-level concern. The market response includes AI-driven vulnerability-detection tools being offered by AI companies; for example, one vendor launched a platform in May, and another disclosed internal and external security testing projects, developments that market participants say have sharpened enterprise security spending.
Key points
- Palo Alto’s CEO held substantive acquisition discussions with Okta and Datadog before completing a $25 billion CyberArk deal.
- Negotiations with Okta stalled on price; Datadog declined a pitched acquisition and no offer was made.
- CyberArk and Chronosphere acquisitions together added $338 million to Palo Alto’s April-quarter revenue, and the company is reported to be considering Cribl and ClickHouse as additional targets.
Risks and uncertainties
- Price and valuation mismatches can derail strategic acquisitions in rapidly appreciating software and cloud markets, affecting M&A activity in cybersecurity and observability sectors.
- Target resistance or lack of receptivity from prospective acquirers can close deal avenues, as seen with Datadog, limiting consolidation options.
- Shifts in enterprise security priorities driven by AI developments may change demand patterns and investment focus, creating uncertainty for vendors across security and AI-tooling markets.