Cisco has confirmed it is spending heavily to continue expanding its software and cybersecurity capabilities, with the purchase of San Francisco-based Splunk.

Cisco announced its intention to acquire Splunk for $157 per share in cash, representing approximately $28 billion in equity value. This is a 31 percent premium on Splunk’s last closing price.

It comes after Cisco had made a $20bn approach for Splunk in 2022, which the Wall Street Journal reported had fallen apart.

Splunk acquisition

Cisco already has a data-security partnership with Splunk, which has made a name for itself helping businesses monitor and analyse their data to minimise the risk of hacks and resolve technical issues faster.

Indeed, Splunk is said to have more than 15,000 customers include many prominent companies such as Coca-Cola, Intel and Porsche.

Both firms said the acquisition builds on Splunk’s heritage of helping organisations enhance their digital resilience and will accelerate Cisco’s strategy to securely connect everything to make anything possible.

The combination of these two will help Cisco bolster its software capabilities, and also capitalise on the rising use of artificial intelligence.

The deal is being being touted as a way to help reduce Cisco’s reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.

“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. “From threat detection and response to threat prediction and prevention, we will help make organisations of all sizes more secure and resilient.”

Cisco CEO Chuck Robbins

“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,” added Gary Steele, president and CEO of Splunk.

Steele will join Cisco’s executive leadership yeam reporting to Chuck Robbins.

Complementary offerings

Cisco and Splunk said both firms have complementary capabilities in AI, security and observability, and the deal will “unlock the true value of data and will help make organisations of all sizes more secure and digitally resilient.”

“Specifically, Splunk’s security capabilities complement Cisco’s existing portfolio, and together, will provide leading security analytics and coverage from devices to applications to clouds,” they stated.

Cisco and Splunk’s capabilities will thus provide observability across hybrid and multi-cloud environments.

It remains to be seen whether any overlap in the cybersecurity offerings from both firms will prompt an antitrust scrutiny.

The deal has been backed by the both boards, and is expected to close by the end of the third quarter of 2024, subject to regulatory approvals.

If the deal is shelved, Cisco will have to pay a termination fee of $1.48 billion.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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