Cisco is set to buy cybersecurity vendor Splunk in a deal worth $28bn. The blockbuster acquisition will see Cisco pay $157 per share in cash for Splunk, with the company’s CEO Gary Steele set to join Cisco’s leadership team once the deal is completed.
Based in San Francisco, Splunk specialises in observability software, which can monitor and analyse large quantities of data to spot anomalies and potential security threats. It reported revenue of $3.65bn last year and says it has over 15,000 customers around the world.
Splunk’s share price rocketed 23% after the deal was revealed today, and at the time of writing its market cap is $24bn, still significantly below the price Cisco is proposing to pay.
Why Cisco is buying Splunk
Cisco says the acquisition, the largest in its history, will allow the company to diversify and speed up its transformation. This includes moving beyond its traditional markets around networking equipment and utilising AI to fight cybersecurity threats, which themselves are increasingly enabled by AI.
Chuck Robbins, Cisco CEO says the deal will enable the combined company to deliver the next generation of AI-enabled security and observability. “From threat detection and response to threat prediction and prevention, we will help make organisations of all sizes more secure and resilient,” he said.
Generative AI, and its widescale use, is increasing cybersecurity threats, Cisco warned, and tackling this is becoming a big issue for tech leaders.
Adding Splunk’s range to Cisco will allow the combined companies to scale up more quickly and expand AI offerings to “unlock the true value of data”. This, according to Cisco, will help make organisations of all sizes more secure and digitally resilient.
Splunk’s Steele said the partnership will also allow for greater investment in new solutions, accelerate innovation and scale up its products. “Uniting with Cisco represents the next phase of Splunk’s growth journey, accelerating our mission to help organisations worldwide become more resilient, while delivering immediate and compelling value to our shareholders,” Steele said.
The goal, he added, is to form a global security and observability leader that will be able to harness the power of data to improve customer outcomes. “We’re thrilled to join forces with a long-time and trusted partner that shares our passion for innovation and world-class customer experience,” he added.
It isn’t clear whether there will be regulatory implications for this deal but Cisco says it hopes to complete by the third quarter of next year. Cisco’s valuation fell 5% after the news was announced.
This isn’t the first time Cisco has bet on AI. Earlier this year the company announced plans to create a series of networking switch chips specifically for AI supercomputers. Named the SiliconOne Series, it is being tested by huperscalers to boost the performance of communication between GPUs.