As Reston cybersecurity company Mandiant Inc. enters into a $5.4 billion sale to Google LLC, a subsidiary of West Coast powerhouse Alphabet Inc., it has stayed largely mum thus far on the fate of its regional offices and employees.
What we do know: Google will operate Mandiant (NASDAQ: MNDT) as an independent brand, and the local company's founder and CEO, Kevin Mandia, as well as its executive team, will join Google Cloud, according to company memos filed with the Securities and Exchange Commission about the sale.
But those memos don't give much window into whether there will be staff layoffs. No cuts have been announced, and both Mandia and Google Cloud CEO Thomas Kurian declined to comment to The Wall Street Journal about the possibility of layoffs as a result of the transaction. A company spokesperson referred the Washington Business Journal's questions about local staff and real estate to the public filings and disclosures.
Of the company's 2,335 employees at the end of last year, roughly 1,000 work in the region, where Mandiant has kept a presence for years and just relocated its headquarters in December. It leases 47,000 square feet at Reston's 11951 Freedom drive in a deal set to expire at the end of 2027. Its legacy Alexandria location, once its headquarters, was already slated to be shut down by the end of 2022, Mandiant’s President and COO John Watters said last month.
Additional offices are positioned “throughout the United States and various international locations, including, but not limited to, Australia, Dubai, Germany, India, Ireland, Japan, Singapore and the United Kingdom,” the company said in its most recent annual report.
“We understand that this announcement raises a lot of questions for each of us personally and we will provide plenty of opportunities for you to have those questions answered,” the company wrote in its memo. “In the near term, we must remain focused on our 2022 plans and priorities. Over the months ahead, Mandiant and Google Cloud will work together to develop and execute on a well-thought-through phased integration plan that will provide a clear path for our entire team.”
In cases of duplication among staff, it wrote in the memo, "anyone is welcome to apply for any open role at Google."
If the deal were to fall apart under certain circumstances, Mandiant would need to pay Google a $197 million termination fee.
In the months preceding the Google announcement, Mandiant directors and executive made multiple stock purchases, sales and payments for tax liabilities. A handful of executives received shares of restricted stock as part of their end-of-year performance incentive plans, while some, including Chief Revenue Officer William Robbins and CFO Frank Verdecanna, who plans to retire this year, sold tranches of 50,000 shares at a little more than $20 apiece as part of a preset trading plan sanctioned in November, yielding at least $1 million worth of proceeds for each.
Institutional holders Blackstone entities and The Vanguard Group are Mandiant's biggest shareholders by far, with a combined 42.4 million shares, or 17.1% ownership as of last April, per the company's most recent proxy statement. But Mandia remains the largest shareholder among its executives and board directors.
Mandia, who founded the original company, holds 3.76 million shares, or 1.5% of the company, both directly and indirectly through trusts and family members, according to SEC filings. That brings his stock value on paper to $86.55 million under this deal with Google.
Watters, who joined last April, owns 409,751 shares directly and indirectly — all worth a $9.42 million under this deal, while Robbins' 382,489 shares are worth nearly $8.8 million and Verdecanna's 520,633 shares are worth $11.97 million.
Originally based in Alexandria, Mandiant was purchased by fellow cybersecurity firm FireEye Inc. of Milpitas, California, in 2013, then turned around and sold off FireEye’s products business during the fourth quarter of last year, shifting its headquarters from California back to the region. The company, in the last two years, has gone through a restructuring effort that cost it roughly $55.66 million in all, including $21.1 million in employee severance costs and affecting 2% of its workforce. As part of that restructuring, then-FireEye shaved down its real estate holdings, decommissioning its Milpitas office space.
At its core, analysts said, Mandiant offers Google a stronger cybersecurity footprint as it looks to compete with industry heavyweights in Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NYSE: MSFT).
The sale is “the tip of the iceberg to a massive phase of consolidation potentially ahead for the cloud space,” said Wedbush Securities analysts Daniel Ives and John Katsingris in an industry note, citing additional potential acquisition targets such as Columbia-based Tenable Holdings Inc. (NASDAQ: TENB). "We believe this deal will have a major ripple impact across the cybersecurity space as cloud stalwarts Amazon and Microsoft will now be pressured into M&A and further bulk up its cloud platforms."
