Okta – the leading player in the Identity and Access management software category – is purchasing its competitor Auth0 in an all-stock deal. Announced on Wednesday, the deal will help publicly-traded Okta establish further dominance in the IAM space. Valued at $6.5billion, it’s among the biggest SaaS acquisitions.
Okta’s CEO Todd McKinnon stated that the deal will help the company become one of the “five or six primary clouds” that customers will turn to. As per him, other companies having such dominance are Microsoft, Salesforce, and Zoom. “For us, identity has to rise up to be one of those primary clouds, and if it doesn’t it will just be kind of subsumed into other clouds and Okta won’t reach its potential,” he added.
As per the deal, Auth0 will receive a fixed number of Okta shares priced at $276.21 each. Interestingly, the price of Okta shares at the time of closing on Wednesday was $241 (down 11 percent after the company announced its quarterly revenue of $234.7million).
Okta helps companies to track and manage the employees’ identities and credentials while they’re using work-related apps, whereas Auth0 caters to how businesses interact with their customers. That means, Auth0 is focused on developers. This also results in different go-to-market motions for the companies. Okta sells from the top-down, whereas Auth0 follows the bottom-up model.
Auth0’s CEO Eugenio Pace said that the two businesses want to create the identity cloud of the future which they are terming as an “identity operating system“. “What’s exciting to me is that these companies are compatible, identity is not a division, a part of another group or a necessary evil. This is all we do. So together, we have this opportunity to move the needle in terms of what we can offer our customers,” Pace added further.
As per a report by Forbes, Auth0 has been exploring sales and other options for the past several weeks. While Okta was the favored buyer, the company was looking for other buyers or the option of going public.
