Microsoft Agrees to Buy U.S.-Israeli Cyber Firm Hexadite for $80-$90 Million

Boston-headquartered company aims to make it easier for information security staff to prioritize and investigate cyberattacks

Hexadite founders, from left,  Barak Klinghofer, Idan Levin and Eran Barak, outside company offices.

Microsoft said Thursday it has agreed to acquire Hexadite, a U.S.-Israeli provider of technology to automate responses to cyberattacks. Financial terms were not disclosed, but the sale price was thought to be between $80 million and $90 million.

Hexadite, which was founded just three years ago by CEO Eran Barak, Idan Levin and Barak Klinghofer, had raised just $10.5 million prior to its sale to Microsoft. The three founders of Hexadite, which is headquartered in Boston, with its research and development center in Israel, have a decade of experience in the information security field, beginning in Israeli army intelligence units. That was followed by their work at Elbit Systems, where they developed a training system for cyber researchers.

“Following the close of the deal and after a period of integration, Hexadite will be fully absorbed into Microsoft as part of the Windows and Devices Group,” Microsoft said in a statement released Thursday. “Hexadite’s technology and talent will augment our existing capabilities,” the statement quoted Terry Myerson, the executive vice president of Microsoft’s Windows and Devices Group, as saying.

Hexadite’s technology is designed to make it easier for information security staff to prioritize and investigate cyberattacks. In its initial stages, Hexadite’s software automatically investigates alerts generated by anti-virus and firewall systems. It then prioritizes and inquires further, and then addresses the threat. Hexadite’s clients include companies in the fields of financial services and retailing, as well as technology and industry, who pay an annual fee for access to Hexadite’s systems.

Hexadite says its technology increases productivity and reduces costs for businesses.

Investors in Hexadite include Hewlett Packard Ventures, and venture capital firms TenEleven and YL Ventures. The company’s most recent funding round was in February 2016, when it raised $8 million.

YL Ventures was the first investor in Hexadite, together with Moshe Lichtman, a partner in the Israel Growth Partners private equity investment firm and a former CEO of Microsoft Israel.

Microsoft said in January it planned to continue to invest more than $1 billion annually on cybersecurity research and development in the coming years.