ServiceNow to spend $7.75 billion on new security platform Why did the stock fall?

ServiceNow, a developer of enterprise software for automating internal business processes, plans to acquire cybersecurity software developer Armis for nearly $8 billion. This is the largest takeover in ServiceNow's history, Barron's notes. At the same time, the company's shares fell by 2.4% at trading on Tuesday. The decline in the value of securities began last week, when the first publications about a possible deal appeared. What's wrong with it?

ServiceNow has agreed to buy Armis for $7.75 billion in cash, the companies said Dec. 23. The parties expect the deal to be finalized in the second half of 2026.

The Armis integration will expand the company's lineup of security workflow solutions and strengthen vulnerability response at a time when advances in artificial intelligence are driving increased spending on cyber threat defense, ServiceNow hopes. The company's proprietary business in the security and risk management segment reached $1 billion in annualized contract volume in the third quarter, Barron's notes.

"ServiceNow is building the security platform of tomorrow," CEO Amit Zaveri said in a press release. - "In the age of agent-based AI, intelligent trust and governance spanning any cloud, any asset, any AI system and any device is becoming an absolute requirement for companies that want to scale AI for the long term.

Shares of ServiceNow were down 2.5% to $152.7 in Tuesday trading. The company's shares fell almost 12% on December 15 - after Bloomberg reported that the company was in talks to buy Armis at a valuation of up to $7 billion. The stock has fallen 31% since the beginning of 2025.

The Armis deal reflects ServiceNow's willingness to use acquisitions as part of its strategy to strengthen its AI-centric products, MarketWatch explains. In March, ServiceNow agreed to buy AI startup Moveworks for $2.85 billion, at the time the company's largest acquisition. Over the past couple weeks, investors have been actively discussing a possible acquisition of Armis, with some expressing concerns that a large takeover could destroy value for shareholders and increase the company's reliance on inorganic growth, the publication explains.

Until now, ServiceNow has largely focused on smaller acquisitions - acquiring startups for the sake of individual functions or teams rather than their revenue. In 2025, the company has accelerated the pace of M&A as it seeks to grow its AI market share. Armis was ServiceNow's seventh announced deal in 2025.

But some analysts are positive about the purchase. Bernstein analyst Peter Weed, for example, wrote in a note to clients last week that ServiceNow shares have been sold off unfairly and that the possible takeover fits strategically well with the company's architecture.

This article was AI-translated and verified by a human editor