Identity and access management giant Okta (NASDAQ: OKTA) late Wednesday announced plans buy rival Auth0 in an all-stock transaction valued at roughly $6.5 billion.
Okta, based in San Francisco, Calif., expects the transaction to speed up its growth in an identity management market estimated to be in the range of $55 billion.
The company said Auth0 will continue to operate as an independent business unit inside of Okta with plans to become an integrated offering over time.
Auth0 offers what it calls a “highly customizable, developer-centric identity management platform” used by thousands of customers around the world. The company has raised more than $330 million in funding, including a $120 million Series F funding at a valuation of $1.92 billion in July 2020.
Bellevue, Wash-based Auth0 was founded in 2013 by Eugenio Pace (CEO) and Matias Woloski (CTO). In March 2020, the company launched Auth0 Signals, a collection of threat intelligence tools and capabilities designed to protect customers from identity attacks.
“Okta’s and Auth0’s shared vision for the identity market, rooted in customer success, will accelerate our innovation, opening up new ways for our customers to leverage identity to meet their business needs,” said Todd McKinnon, Chief Executive Officer and co-founder, Okta. “We are thrilled to join forces with the Auth0 team, as they are ideal allies in building identity for the internet and establishing identity as a primary cloud.”
The deal is expected to close during Okta’s second quarter of fiscal year 2022, the quarter ending July 31, 2021.
The $6.5 billion price tag dwarfs the $2.35 billion that Cisco shelled out to aquire identity and access management solutions provider Duo Security in 2018.
Shares of Okta dropped more than 10% in after hours trading Wednesday, after closing down nearly 7% during reguar trading hours.