As the security industry is rapidly being reshaped around AI, mergers and acquisitions among companies are also active.

The Wall Street Journal reported on Tuesday, citing sources, that Proofpoint, a security company owned by private equity firm Thoma Bravo, is in late-stage talks to buy cybersecurity company Varonis Systems.

The report said Varonis has a market capitalisation of about $5 billion. After news of the acquisition talks, Varonis shares jumped more than 10 percent on Tuesday afternoon, lifting its market value to about $5.4 billion.

The WSJ also said the talks could fall apart or another potential buyer could emerge.

Varonis provides services to protect and manage corporate data stored in cloud systems. Varonis shares have fallen about 20 percent over the past year. Against that backdrop, Bloomberg reported in June that Varonis was reviewing several options, including a sale.

Proofpoint, centred on email security, has acquired about 10 security companies and expanded into fields including advanced persistent threat protection, security awareness education and training, cloud security, compliance and archiving, data loss prevention and digital risk protection.

Thoma Bravo is a private equity firm that has long invested in technology companies and bought Proofpoint in 2021. Despite investor concerns over the spread of AI, Thoma Bravo Managing Partner Orlando Bravo has repeatedly expressed optimism about the software industry. He has said the portfolio companies are delivering "overwhelming results."

Palo Alto Networks also bought Console, a startup that uses AI agents to automate repetitive IT helpdesk tasks, for $500 million. TechCrunch reported on Tuesday that the purchase price was paid in cash and stock.

Console has provided solutions that handle tasks such as password resets, granting access permissions to apps such as Figma and Miro, and repetitive troubleshooting work without direct human intervention.

Palo Alto Networks plans to integrate Console technology into its security platform Cortex. Cortex is a platform that automatically detects and neutralises threats using AI. With Console agent functions added, security teams will be able to investigate and resolve alerts using natural language. Palo Alto Networks CEO Nikesh Arora said Console would add execution capability to Cortex to implement autonomous security operations across the enterprise.

The deal is Palo Alto Networks' seventh acquisition this year. Palo Alto Networks recently acquired observability platform Chronosphere at a valuation of $3.35 billion and Coi for $400 million.