In a statement Okta Inc, an identity management company said, it has agreed to acquire Auth0, a smaller rival, for $6.5 billion in an all-stock deal.
The development marks one of the largest software deals so far this year.
The deal’s synergy comes from Okta ability to leverage Auth0’s customer identification product in the $55 billion identity market, in the wake of the coronavirus-induced COVID-19 pandemic pushing companies of all sizes to shift to remote working and interact with clients online.
Both Okta and Auth0, have cloud-based offerings to help verify and secure the identities of an organization’s workforce and customers before they are allowed to access certain applications or websites.
Known for its employee identification systems, Okta has expanded its customer identification business which now accounts for a quarter of its revenues.
“The customer part is growing faster than the workforce part,” said Okta’s CEO Todd McKinnon in an interview. “We have 10,000 customers, and there are millions of customers that could use both of our solutions.”
After the deal, Auth0 will operate as an independent business unit within Okta; both platforms will be integrated in time.
On Wednesday, Okta reported quarterly revenue of $234.7 million, an increase of 40%. The San Francisco-based company’s share price has jumped during the pandemic, taking its market cap to more than $30 billion.
The deal is expected to close during the second quarter of this year.
Morgan Stanley advised Okta on the deal while Qatalyst Partners advised Auth0.