NEW YORK (BLOOMBERG) - Google is in talks to acquire cyber-security company Mandiant in what would be its second-biggest deal ever, according to a person familiar with the matter, after rival suitor Microsoft backed out of discussions.
Microsoft pulled out of talks more than a week ago, said two people with knowledge of the deliberations who asked not to be identified because the situation is private.
The discussions with Google, first reported by the Information website, sent shares of Mandiant up 16 per cent at the close of trading Monday (March 7).
Google and Microsoft are both looking to bolster their cyber-security operations - an increasingly vital part of the companies' cloud-computing businesses. With Mandiant, Google gets more tools to protect clients and respond to online threats.
The business was founded almost two decades ago by Mr Kevin Mandia, a former United States Air Force officer, and has gained a reputation for its incident response services.
Representatives for Microsoft and Google declined to comment. Mandiant did not immediately respond to a request for comment.
Microsoft ended its takeover discussions on concerns that Mandiant's collection of security businesses was not a good enough strategic fit, according to one of the people.
Mandiant's stock climbed to US$22.49 (S$30.67) by the close on Monday, marking the biggest one-day gain since Feb 8, when the Microsoft talks were reported. The shares have advanced 28 per cent this year.
The stock gave up some of those gains in late trading after Bloomberg reported that Microsoft had pulled out of talks, a sign investors were anticipating a bidding war. The shares slipped as much as 6.1 per cent.
Mandiant became a stand-alone company again last year when FireEye sold its security-product business for US$1.2 billion to a consortium led by Symphony Technology Group.
FireEye had acquired Mandiant in 2013. Following Monday's rally, the takeover target has a market valuation of US$5.26 billion. At that level, a deal would dwarf every previous Google transaction - other than its 2012 acquisition of Motorola Mobility for about US$12.5 billion.