Cisco's $28B Deal of Cybersecurity Marvel Splunk

Unlocking Seismic Deal

Cisco Systems has announced a $28 billion acquisition of cybersecurity firm Splunk, marking its largest-ever deal. 

The acquisition aims to strengthen Cisco's software business and leverage artificial intelligence in the cybersecurity domain. 

This strategic move by Cisco aims to reduce its dependence on networking equipment, which has faced supply chain challenges and post-pandemic slowdown. 

Cisco's offer of $157 per share for Splunk represents a significant 31% premium over the company's previous closing price. 

Following the announcement, Splunk's stock surged by 23%, while Cisco's stock dropped nearly 5% 

The combined entity of Cisco and Splunk is set to become one of the world's largest software companies, with a focus on recurring revenue. 

Cisco and Splunk have an existing data-security partnership, with Splunk serving over 15,000 customers, including notable names like Coca-Cola, Intel, and Porsche. 

Splunk, despite experiencing nearly 40% revenue growth in the previous year, faces challenges in 2023 due to rising interest rates and inflation. 

The acquisition is expected to accelerate revenue growth and gross margin expansion for Cisco in the first fiscal year after the deal's closure 

The deal was unanimously approved by both Cisco and Splunk boards and is anticipated to close by the end of the third quarter of 2024, pending regulatory approvals. 

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