German firm acquires ex-Mossad chief’s cybersecurity startup for $700m

Israeli cybersecurity company XM Cyber, co-founded by former Mossad chief Tamir Pardo, is being acquired by Germany’s Schwarz Group, a multinational retail operation with some $140 billion in reported annual revenue, for $700 million.

XM Cyber will continue to operate independently and offer its products under its current brand and support structure, according to the announcement Monday. The company

Schwarz Group, Europe’s largest retailer, operates large grocery chains such as Lidl and Kaufland. Last year, the multinational entered the cloud computing space, announcing that it was building its own cloud computing platform for retailers, called Stackit, to rival AWS (Amazon Web Services), Microsoft and other large cloud providers. The group also acquired Germany-based software specialist company Camao IDC to bolster its IT branch.

XM Cyber, (XM stands for ex-Mossad) was founded in 2016 by Pardo, Noam Erez, a 25-year veteran of the Israeli intelligence community, and Boaz Gorodissky, a 30-year veteran of the community.

The Herzliya-based company has approached cyber threats from a hacker’s point of view and its automated advanced persistent threat simulation platform works to find new exposures, exploitable vulnerabilities and credentials, misconfigurations, and user activities that could potentially put organizations at risk of an attack.

XM Cyber’s clients include large financial institutions, healthcare organizations, and critical infrastructure companies in Europe and the US. The company recently entered the United Arab Emirates market as part of a consortium led by Rafael to offer solutions that address “national-level critical services and infrastructures needs, to provide defense against cyber warfare malicious activities by state actors, as well as by independent rogue hackers, to protect assets such as transportation, oil and gas, manufacturing, water and sewage, energy infrastructure.”

The Israeli company indicated that it doubled its number of clients worldwide in 2020 as the world grappled with the effects of the COVID-19 pandemic and more companies digitized their operations.

Schwarz Group said XM Cyber’s “comprehensive knowledge in securing complex hybrid cloud networks” was an essential aspect of the strategic acquisition.

“XM Cyber brings deep technical understanding and innovation that perfectly complements our portfolio for advanced cybersecurity services,” said Christian Müller, chief information officer of Schwarz Group, in a statement Monday. “Finding and closing security gaps from an attacker’s perspective is a disruptive approach to the way organizations can proactively protect their networks.

“XM Cyber’s solution builds on our strong IT security to further protect our customers, partners, and ourselves as a company,” added Müller.

Schwarz Group chief digital officer Rolf Schumann said the acquisition will allow the multinational to “offer our customers even more services and evolve the shopping and customer experience in a more holistic way.”

Erez, who serves as XM CEO, said that “with the backing and international footprint of the largest European retailer, we can accelerate innovation and growth and further strengthen our position in the global cybersecurity market.”

XM Cyber has offices in New York, Dallas, London, and Munich. The company has raised about $50 million to date with investors such as Nasdaq Ventures, Australia’s Macquarie Capital, Our Innovation Fund, and Swarth Group, owned by Italy-based Israeli businessman and investor Shaul Shani.