In Second Israel Deal in a Month, Microsoft to Buy Cloudyn

Cloud-services startup estimated to have fetched $50 million

Microsoft's office in Haifa.

In its second Israeli acquisition in less than a month, Microsoft said on Thursday it had agreed to buy the Israeli startup Cloudyn for an undisclosed sum, to help beef up its offerings in its fast-growing cloud-computing business.

The U.S. company didn’t disclose how much it paid for Cloudyn, which helps companies monitor and optimize data they store in the cloud, but sources said the figure was about $50 million. Microsoft paid an estimated $90 million for the Israeli cybersecurity startup Hexadite three weeks ago.

Although Microsoft is based known for Windows and other PC-based software, under CEO Satya Nadella it has been moving into the fast-growing segments of mobile and cloud computing.

Cloud computing, which Microsoft offers under the Azure brand name, enables businesses to store, manage and process data on remote servers hosted on the internet, rather than on a local server or personal computer.

“As a Microsoft partner, Cloudyn has supported cost management for Microsoft Azure and other public clouds, helping customers continuously improve their cloud efficiency,” said Jeremy Winter, director of program management, Azure security and operations management at Microsoft.

Cloudyn was formed in 2011 by CEO Sharon Wagner; Vittaly Tavor, vice president for products; and Chief Technology Officer Boris Goldberg. The company, with headquarters in Boston and research and development in Rosh Ha’ayin, central Israel, employs some 80 people. They will now become part of Microsoft’s Israel R&D team.

The startup’s backers include RDC, a joint venture between the state-owned arms maker Rafael and the investment company Elron. Other backers include Carmel Ventures and the Indian software giant Infosys. All told, they invested about $22 million in the company – although in RDC's case it will have tripled its money in five years if the reported purchase price is correct.

Elron, which is traded on the Tel Aviv Stock Exchange, said RDC would get $17 million from the sale and that Elron itself would report a $6 million gain.

Microsoft employs 1,600 people in Israel, 1,000 of them in R&D at centers in Herzliya, Haifa and Nazareth.