BY Richard Summerfield
In a deal which represents the biggest technology transaction of the year to date, Cisco Systems has agreed to acquire cyber security firm Splunk in a $28bn deal. The deal will create one of the world’s largest software companies upon completion.
Cisco offered $157 in cash for each share of Splunk, a 31 percent premium to the company’s last closing price before the deal was announced.
The acquisition has been unanimously approved by the boards of directors of both Cisco and Splunk, and it is expected to close by the end of the third quarter of 2024, subject to regulatory approval and other customary closing conditions, including approval by Splunk shareholders. The deal is expected to improve Cisco’s gross margins in the first year and non-generally accepted accounting principles (GAAP) earnings in year two.
“We’re excited to bring Cisco and Splunk together,” said Chuck Robbins, chair and chief executive of Cisco. “Our combined capabilities will drive the next generation of AI-enabled security and observability. From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.”
“Uniting with Cisco represents the next phase of Splunk’s growth journey, accelerating our mission to help organizations worldwide become more resilient, while delivering immediate and compelling value to our shareholders,” said Gary Steele, president and chief executive of Splunk. “Together, we will form a global security and observability leader that harnesses the power of data and AI to deliver excellent customer outcomes and transform the industry. We’re thrilled to join forces with a long-time and trusted partner that shares our passion for innovation and world-class customer experience, and we expect our community of Splunk employees will benefit from even greater opportunities as we bring together two respected and purpose-driven organizations.”
Splunk’s technology helps businesses monitor and analyse their data to minimise the risk of hacks and resolve technical issues faster. Cisco will utilise Splunk’s technology to strengthen its software business, which relies heavily on AI and provides a variety of cyber security services, such as building tools to protect users and digital businesses from data breaches.
In the quarter ended 31 July 2023, Splunk’s annual recurring revenue was $3.9bn, up 16 percent on the same period last year. Its revenue for the quarter was $910m, beating analysts’ expectations.
The deal for Splunk will dwarf Cisco’s previous largest deal, the 2006 acquisition of cable set-top box maker Scientific Atlanta for $6.9bn.
News: Cisco to buy cybersecurity firm Splunk for $28 billion