EU retail giant Schwarz Group snags security startup XM Cyber for $700 million

Schwarz Group, an EU-based retail company, announced today that it has acquired Israeli security startup XM Cyber for $700 million. It may seem like a strange partnership, as Schwarz is best known as the owners of the Lidl and Kaufland supermarkets, but the company believes that extending into security will ultimately help benefit its retail business.

XM helps customers simulate what an attack could look like to expose flaws and openings in a company’s security posture with the goal of shutting down vulnerabilities before an actual cyberattack happens.

Christian Müller, chief information officer at Schwarz Group, says that adding a security piece to the portfolio is essential, especially as more shopping moves online. “Finding and closing security gaps from an attacker’s perspective is a disruptive approach to the way organizations can proactively protect their networks. XM Cyber’s solution builds on our strong IT security to further protect our customers, partners and ourselves as a company,” Müller said in a statement.

Meanwhile, XM Cyber CEO and co-founder Noam Erez sees the advantages of being part of a large corporation, even if it lacks a technology focus. “For XM Cyber customers, this means that with the financial backing of Schwarz, we will be able to accelerate product innovation, scale and extend our global reach. For Schwarz customers, with their continued investment in their digital product range, the ability to secure suppliers, consumers and businesses is a key enabler in delivering on the promise of digital transformation,” Erez said.

Perhaps not surprisingly, Schwarz intends to let XM continue to operate as an independent entity under the terms of the deal and all 110 employees will keep their jobs, meaning that existing customers should likely see little change in how things operate.

Perhaps they will get the advantage of XM being part of the larger company as Erez says, so long as the parent company doesn’t make any significant changes behind the scenes, but some customers may also be put off by the company being owned by a non-tech entity. Time will tell on that front.

XM Cyber was founded in 2016 and raised $49 million, according to Crunchbase data. The most recent deal was a $17 million Series B in July led by Macquarie Capital.