On September 21, 2023, Cisco announced its largest ever acquisition with the purchase of cybersecurity company Splunk for $28 billion. The deal is expected to close in the second half of 2024.
As Wall Street processed Cisco’s $28 billion acquisition of Splunk, a cloud and cybersecurity company powered by artificial intelligence, its shares also declined on Thursday. Splunk shares jumped up on Thursday up 21%,
The technology from Splunk enables companies to keep an eye on and analyze their data to lower the risk of hacking and address technical issues more quickly.
Businesses and organizations of all sizes utilize the company’s solutions to gather, analyze, and keep track of their data. Splunk’s technologies can be used to identify security issues and take appropriate action, boost operational effectiveness, and uncover information about how well businesses are doing.
According to Reuters interview, “The thing that gives you conviction is we are bringing together two companies around security and observability, which are two of the most important areas for our customers and areas where they are unlikely to cut spending in – just because of the criticality of these threats,” Cisco CEO Chuck Robbins told Reuters in an interview
Cisco will have a solid presence in the data analytics and security business thanks to the acquisition of Splunk. The business will be able to provide its clients with a wider range of cybersecurity solutions. Additionally, the acquisition will enable Cisco to increase its presence in emerging industries like the cloud and the Internet of Things (IoT).
The $157 per share in cash that Cisco is offering marks a premium of nearly 31% over Splunk’s Wednesday close.
“Combined, Cisco and Splunk will become one of the world’s largest software companies and will accelerate Cisco’s business transformation to more recurring revenue,” according to the companies statement.
Analysts consider Cisco’s purchase of Splunk to be a wise decision. The agreement will allow Cisco to utilize Splunk’s technology and knowledge while also assisting Cisco in growing its market share.