Cisco spends $28B on data cruncher Splunk in cybersecurity push
$157/share cash deal is the largest acquisition in networking titan's history
Cisco is making its most expensive acquisition ever – by far - with an announcement it's buying data crunching software firm Splunk for $157 per share, or approximately $28 billion (£22.8b).
The transaction, which Cisco said it expects to close in calendar Q3 of 2024, was already unanimously approved by the boards of both companies, and once completed will see Splunk CEO Gary Steele join Cisco's exec team as a direct report to Cisco CEO Chuck Robbins.
Cisco expects the cash transaction to be cash flow positive and to boost gross margins this year, and says it will add to the company's earnings per share by next year. Splunk confirmed the sale in an SEC filing.
Per Cisco, the deal will bring Splunk's analytics capabilities to Cisco to create a new model of cybersecurity that prioritizes threat prediction and prevention over threat detection and response.
"Together, we will form a global security and observability leader that harnesses the power of data and AI," said Steele. "We're thrilled to join forces with a long-time and trusted partner that shares our passion for innovation."
Maybe together they can help Cisco avoid such embarrassing security situations as a brute-force vulnerability in Cisco VPN software that was discovered this month, or penetration of its corporate network by threat actors linked to Lapsus$, or some of the other issues we've reported.
As for the particular elements of Splunk that'll be brought to Cisco's products, the company only says the pair would "provide leading security analytics and coverage from devices to applications to clouds."
"Cisco Security Cloud has visibility into vast amounts of security data," Robbins said in a blog post about the deal. "With Splunk, Cisco is adding one of the world's best data platforms to Cisco's robust security portfolio."
As this is 2023, no deal involving vast amounts of data would be complete without the mention of AI, which Robbins included. "Generative AI is rapidly transforming industries and creating new opportunities … we believe we're very well positioned to provide customers visibility to their data and enable them to take advantage of the many opportunities with AI," Robbins said.
While both boards unanimously agreed to the deal, it's still not a sure thing – regulators could hold it up, and Splunk shareholders will have a right to turn the sale down, too, though if they did they'd be turning down $157 cash per share. Splunk stock has risen by around 20 percent in pre-market trading since the deal was announced, but it's still short of that price target.
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While Robbins and Steele both made mention of the company culture fit between Cisco and Splunk, it's not entirely clear what'll happen to Splunk's employees or its brand after the acquisition closes, and Cisco's response to our questions didn't do much to answer that question.
Cisco and Splunk will continue to operate as independent companies until the acquisition closes," a Cisco spokesperson told The Register – but after that all bets are off, and no specifics were mentioned. "As we progress through joint integration planning prior to the close of the acquisition, Cisco and Splunk leadership will begin to plan for how we will bring our organizations together," the spokesperson said.
Cisco is holding an investor webcast today, during which it'll likely share additional details of the Splunk acquisition. ®