Palo Alto Networks Inc. agreed to buy CyberArk Software Ltd. in a cash-and-stock deal valuing the Israeli cybersecurity company at about $25 billion.

Shares of Palo Alto fell 8.6% on the news.

Palo Alto will pay CyberArk investors $45 per share and 2.2005 shares of Palo Alto stock, according to a statement on Wednesday. The companies said the value implies a 26% premium to CyberArk shares on a volume weighted average over 10 days before the Wall Street Journal reported on the acquisition talks. The transaction is expected to close during the second half of Palo Alto Networks’ fiscal 2026.

The deal is Chief Executive Officer Nikesh Arora’s largest since taking the helm in 2018 and gives Palo Alto Networks a suite of identity security tools, which help users determine who should have certain access rights within an organization. These products can also be used with artificial intelligence programs, and will be in higher demand as more companies use AI agents to perform tasks, Bloomberg Intelligence analysts Mandeep Singh and Damian Reimertz said in a note.

Shares of CyberArk had gained 30% this year, giving it a market value of more than $21 billion. That increase includes the 13% jump on Tuesday.

Cybersecurity providers are becoming more acquisitive, with some looking to offer a full platform of products to customers that are seeking to save money by reducing vendors. Alphabet Inc. agreed to buy the cyber startup Wiz this year for $32 billion to add to its Google Cloud business. In April, Palo Alto announced plans to buy the startup Protect AI, which specializes in securing AI and machine learning applications and models.

JPMorgan Chase & Co. advised Palo Alto and Qatalyst Partners advised CyberArk.