ServiceNow to buy Armis for $7.75 billion as AI-fueled cyber risks surge

By Kritika Lamba and Jaspreet Singh

Dec 23 (Reuters) - ServiceNow NOW.N on Tuesday agreed to buy cybersecurity startup Armis for $7.75 billion, in the enterprise software maker's biggest-ever deal, as it bolsters its services to help counter rising cyberattacks driven by AI adoption.

Through the deal, the company aims to integrate Alphabet-backed Armis' security features such as device scanning and threat detection, a crucial advantage amid sophisticated cyberattacks that have hit companies ranging from Microsoft MSFT.O to UnitedHealth Group UNH.N.

However, ServiceNow's shares fell about 3%, as investors worried over the company's recent splurge on acquisitions.

"Our security stack, with the acquisition of Armis, is very well positioned, so we won't need to do any more M&A in security space," ServiceNow Chief Financial Officer Gina Mastantuono told Reuters.

The company expects the deal, scheduled to close in the second half of 2026, to triple the market opportunity for its security and risk business.

"ServiceNow's buying spree shows it's trying to get ahead of competitors on the orchestration and governance front by acquiring IP, tech leadership, and customer bases," said Rebecca Wettemann, CEO of Valoir, an industry research and advisory firm.

In recent months, ServiceNow has bought security firm Veza, AI company Moveworks and sales automation platform Logik.ai, formerly Logik.io. The company closed its $2.85 billion acquisition of Moveworks this month.

Armis, valued at $6.1  billion in a funding round in November, was preparing for an initial public offering.

The startup's latest funding was led by the alternative investment platform of Goldman Sachs GS.N. Existing investor CapitalG, Alphabet's GOOGL.O VC arm, also participated in the round.

Armis, founded in 2015, unveiled a three-year plan last month to reach $1 billion in annual recurring revenue after crossing the $300 million milestone in August.