Cisco has announced its intent to acquire Splunk in a deal valued at approximately $28 billion. This strategic merger aims to combine the strengths of two industry giants, ushering in a new era of AI-driven security and digital resilience.
The definitive agreement between Cisco, a global leader in cybersecurity solutions, and Splunk, renowned for its observability expertise, signals a pivotal moment in the tech industry. Under the agreement, Cisco will purchase Splunk for $157 per share in cash.
One of the key aspects of this acquisition is the addition of Splunk’s President and CEO, Gary Steele, to Cisco’s Executive Leadership Team. Steele will report directly to Chuck Robbins, Cisco’s Chair and CEO. This move underscores the commitment to leverage the collective wisdom and experience of both organisations.
At the heart of this merger lies a vision to empower organisations worldwide to enhance their digital resilience. Cisco’s Robbins, highlighted this vision, saying, “From threat detection and response to threat prediction and prevention, we will help make organisations of all sizes more secure and resilient.”
Securing an AI-driven world
The integration of Cisco and Splunk is poised to address the intricate challenges posed by today’s hyperconnected world. The ubiquity of data, coupled with the rapid adoption of generative AI, expanding threat surfaces, and the proliferation of multiple cloud environments, has created an unprecedented level of complexity for organisations. They require more robust solutions for managing, protecting, and unlocking the true value of data.
Together, Cisco and Splunk plan to confront these challenges head-on. The combination of their established leadership positions in AI, security, and observability is expected to unlock the full potential of data. This, in turn, will enhance the security and digital resilience of organisations across the spectrum, regardless of their size.
One of the significant advantages of this merger is the complementary nature of the two companies’ capabilities. Splunk’s security expertise will seamlessly integrate with Cisco’s existing portfolio, offering comprehensive security analytics and coverage that spans from devices to applications to cloud environments.
Furthermore, the collaboration between Cisco and Splunk will extend observability across hybrid and multi-cloud environments. This will enable organisations to provide seamless application experiences, powering their digital operations efficiently. Given the substantial scale, data visibility, and foundation of trust enjoyed by both organisations, they are well-positioned to responsibly harness the power of AI for the benefit of their customers.
This union will facilitate greater investments in innovative solutions, accelerated innovation, and increased global scale to meet the diverse needs of customers, irrespective of their size.
Notably, the acquisition is not just a business transaction; it is a union of like-minded organisations with shared values, strong cultures, and exceptionally talented teams. Both Cisco and Splunk have earned recognition as “Great Places to Work” and are deeply committed to innovation and inclusion. This acquisition promises to uphold these values, ensuring that it remains a premier place for software talent.
Transaction details
In accordance with the agreement’s provisions, Cisco plans to purchase Splunk at $157 per share in cash, amounting to an estimated equity value of around $28 billion. Forecasts indicate that this transaction will result in positive cash flow and an increase in gross margin during the initial fiscal year following the deal’s closure. Furthermore, it is anticipated to contribute positively to non-GAAP EPS in the second year, while also propelling Cisco’s revenue growth and expanding its gross margin.
The acquisition has already received unanimous approval from the boards of directors of both Cisco and Splunk. However, it is subject to regulatory approval and other customary closing conditions, including the consent of Splunk shareholders. The anticipated timeline for completion is by the end of the third quarter of the calendar year 2024.
For a comprehensive understanding of all terms and conditions related to this definitive agreement, interested parties are encouraged to refer to Cisco’s Current Report on Form 8-K, which will be filed in conjunction with the transaction.
