Oppenheimer: 'Never Say Never' On Check Point-CyberArk M&A, But Probability Low

• While Cyberark Software Ltd CYBR shares have surged 14 percent in the last one month, shares of Check Point Software Technologies Ltd. CHKP are down 5 percent.
• Oppenheimer's Shaul Eyal stated that there is low probability of a deal between the two companies, given Check Point’s M&A strategy so far.

According to the Israeli press, Check Point Software and CyberArk Software are in preliminary discussions regarding a potential acquisition of the latter company by the former. While the article did not indicate any price tag for a potential deal, it mentioned that such a hypothetical deal would become Check Point’s largest ever, analyst Shaul Eyal mentioned.

If completed, this transaction could provide Check Point with “a new growth engine in the form of strong access into the quickly growing privileged accounts management (PAM) arena,” Eyal wrote.

The analyst pointed out that the two companies had already been partnering in recent years on various products, and both have considerable R&D centers in Israel. Check Point’s balance sheet has $3.6B of cash and financing such a transaction would not be a hurdle.

Eyal commented, however, that the deal “would certainly mark a deviation from its recent years' strategy of acquiring tuck-in technologies (Lacoon and Hyperwise in 2015 for a combined sub-$200M).”

In the report Oppenheimer noted, “While we never say never, we currently assign such a transaction a low probability based mainly on CHKP's historical M&A strategy . . . history also has a tendency to rewrite itself.”