Security information and event management (SIEM) and user and entity behavior analytics (UEBA) vendors LogRhythm and Exabeam announced today their intention to merge. Analysts forecast a tumultuous time in the short term and an unknown future in the long term for this merger of two “dramatically different” companies.

The merger is expected to close in the third quarter of 2024, subject to regulatory approvals and customary closing conditions.

LogRhythm and Exabeam claim customers will benefit from enhanced research and development investments and product innovation and access to a larger artificial intelligence (AI) driven product portfolio.

“With more than 20 years of best-in-class SIEM and UEBA experience in serving thousands of worldwide customers, we are poised to create a new employee-inspired organization that encapsulates the absolute best of what we both offer,” LogRhythm CEO Chris O’Malley said in a statement.

“As a combined organization, we will continue to push the envelope of security operations innovation with solutions that bring AI, automation, SIEM, security analytics, and UEBA together to deliver a holistic approach to combating cyberthreats,” said Exabeam CEO Adam Geller in a statement.

The merger of LogRhythm and Exabeam brings changes to SIEM market

Gartner’s latest Magic Quadrant for SIEM named Exabeam as a leader and LogRhythm as a niche player in the report.

The firm has seen the SIEM market itself disrupted by internal and external forces. Gartner noted its SIEM conversations with clients often include other security technologies such as cloud-native security suites, data lake solutions and extended detection and response (XDR) offerings.

Meanwhile, Forrester analysts noted in a blog post they expect more consolidation in the security analytics platform market and increased competition from XDR vendors that are pushing into the security operations (SecOps) space.

Challenges and opportunities ahead

Forrester principal analyst Allie Mellen and VP and research director Joseph Blankenship argue the LogRhythm and Exabeam merger is “a classic case of opposites attract.”

They pointed out that LogRhythm has languished in the last 5 -10 years, as it is struggling to transition its product and customers to the cloud and has faced challenges with a lack of innovation and slow time to market on its cloud-native offering.

In July 2018, Thoma Bravo announced that it had become the majority investor in LogRhythm.

On the other hand, Exabeam hit its customer peak around 2020 because of its high-quality UBA, but its popularity waned in recent years due to its lack of completeness in areas such as the SIEM and security orchestration, automation, response (SOAR) capabilities, according to Mellen and Blankenship.

In October 2023, Exabeam announced a reduction of approximately 20% of its global employee base.

“Both of these companies have faced challenges in recent years that are not solved by a merger: difficulty keeping pace with market innovation and with the transition to the cloud,” Forrester analysts wrote.

However, the merger could be beneficial for these two companies, they pointed out. “LogRhythm has a solid SIEM foundation while Exabeam has a high-quality UBA. Both companies needed a missing piece the other could provide. which is an opportunity for customer expansion.”