Cisco Systems Inc. has unveiled its intentions to purchase the cybersecurity powerhouse Splunk in a whopping $28 billion transaction. This monumental deal stands as Cisco’s most significant acquisition to date. The acquisition underscores Cisco’s ambition to delve deeper into software AI-driven data analytics and fortify its cybersecurity measures.
The acquisition is a testament to Cisco’s commitment to enhancing its security infrastructure and a strategic move to embrace the expanding role of artificial intelligence in the tech landscape. Chuck Robbins, Cisco’s Chair and CEO, expressed his enthusiasm, stating, “Together, we’re poised to redefine AI-powered security and observability. Our joint expertise will detect and respond to threats and predict and prevent them, ensuring a safer digital environment for organizations everywhere.”
Regarding the financials, Cisco has agreed to a cash payment of $157 per share, marking a 31% premium over Splunk’s last recorded closing price. This acquisition value is approximately 10% of Cisco’s market capitalization, as reported by Bloomberg.
Historically, Cisco’s revenue streams have been dominated by its networking hardware. However, the tech titan has gradually shifted its focus towards software and services. Their recent endeavors in the AI and security tech sectors are evident in this transition. This acquisition can be seen as a dual investment in the burgeoning AI sector and the ever-critical software and data security domain.
Earlier in the year, Splunk launched a series of AI tools designed to enable businesses to detect and address data anomalies swiftly. This merger promises to amplify the reach and efficiency of these AI solutions, providing a more comprehensive data insight, as highlighted in the joint statement released on Thursday.
The acquisition has received the green light from the boards of both corporations. However, the final nod from Splunk’s shareholders is still pending. The deal is anticipated to be finalized by the third quarter of 2024.
Following the announcement, Cisco’s shares experienced a dip of almost 4% during Thursday’s early trading hours. In contrast, Splunk witnessed a robust surge in its stock, climbing over 20%.