Cisco is one of the largest and most successful tech companies in the world, with a market capitalization of $225 billion. Its net income of $12.6 billion in the last fiscal year further solidifies its position as a top leader in the industry.
In 2012, Splunk, which was established in 2003, went public. For the last quarter, the company reported a loss of $63 million.
Cisco has announced its largest acquisition by purchasing cybersecurity software company Splunk. The cash deal is worth approximately $28 billion, with each share being acquired for $157.
Cisco has been facing challenges with its networking equipment business in recent years due to supply chain issues and a slowdown in demand following the pandemic. To mitigate this, the company has struck a deal to reduce its dependence on this segment.
“We’re excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability,” said Chuck Robbins, chair and CEO of Cisco.”
Meanwhile, Gary Steele, the president and CEO of Splunk, was enthusiastic about the potential of the merged businesses. “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,”
The merger of these two organizations will enable more significant investment in innovative solutions, faster innovation, and expanded global reach to meet the needs of customers of all sizes.
Cisco’s acquisition of Splunk will strengthen the companies’ shared values, cultures, and talented teams.
The agreement, which has received unanimous approval from the boards of Cisco and Splunk, is anticipated to be finalized by the conclusion of Q3 2024, pending regulatory authorization.
Cisco plans to buy Splunk for $28 billion in cash, with each share valued at $157. The acquisition is expected to be cash flow positive and boost gross margin in the first year after closing and non-GAAP EPS in the second year.
“The transaction will not impact Cisco’s previously announced share buyback or dividend program,” Cisco said.