Cisco to acquire Splunk in $28 billion deal

Cisco acquired Splunk in July 2023 for $28 billion in cash and stock. The deal was Cisco's largest acquisition  as on date., and it was seen as a major move by the company to expand its presence in the cybersecurity market.

The acquisition of Splunk marks Cisco’s largest deal to date and showcases the company’s ambition to capitalise on the rising use of artificial intelligence and intent to build up its software business.

Splunk is a software company that specializes in data observability and security. Its products are used by businesses of all sizes to collect, monitor, and analyze data from a variety of sources.

The USP of Splunk's products can be used to detect and respond to security threats, troubleshoot problems, and improve operational efficiency. The acquisition of Splunk is expected to help Cisco expand its cybersecurity offerings and make it easier for customers to manage their security from a single platform.

Secondly, Splunk's data observability capabilities are also seen as a valuable addition to Cisco's portfolio, as they can help businesses to better understand their networks and applications.

Cisco has long been the world’s largest maker of computer networking equipment and has been bolstering its cybersecurity business to meet customer demands and fuel growth. Chuck Robbins,CEO,CISCO Systems emphasized the importance of artificial intelligence and using the power of AI that comes with Splunk’s technology to protect networks.

“Our combined capabilities will drive the next generation of AI-enabled security and observability,” Robbins said, in a statement. “From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.” The acquisition has been met with mixed reactions from analysts and industry experts.

Both companies commented in a joint statement: “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

Some analysts have praised the deal, arguing that it will create a strong cybersecurity powerhouse. Others have expressed concerns that the deal could lead to higher prices for customers and less innovation in the market.

The all-cash deal, which is expected to close before the fourth quarter of 2024, sees Cisco paying $157 per share, which represents a 31% premium on Splunk’s last closing price. Should the deal fall through, Cisco faces a $1.48 billion termination fee.

Overall, the acquisition of Splunk by Cisco is a significant event in the cybersecurity industry. It is expected to have a major impact on the way that businesses manage their security and observability.