Cisco and Splunk have announced a definitive agreement for Cisco to acquire Splunk. This move will help organizations shift towards threat prediction and prevention, accelerating Cisco’s business transformation. The acquisition is expected to be cash flow positive and gross margin accretive in the first fiscal year post-close, and non-GAAP EPS accretive in year 2. The combination of the two companies will make them one of the largest software companies globally, focusing on security and observability in the age of AI.
After the acquisition, Splunk President and CEO Gary Steele will join Cisco’s Executive Leadership Team, reporting to Chair and CEO Chuck Robbins. This deal builds on Splunk’s legacy of enhancing digital resilience and supports Cisco’s strategy to connect everything securely, unlocking greater digital resilience for organizations. The combined capabilities aim to drive the next generation of AI-enabled security and observability, making organizations more secure and resilient.
The deal is valued at $28 billion in equity value, with each Splunk share being acquired for $157 in cash. The acquisition will bring together two organizations with strong cultures, talented teams, and shared values. It will unite two “Great Places to Work” and enable the companies to lead in security and observability in an AI-driven era.
The combination of Cisco and Splunk will address the challenges organizations face in managing, protecting, and leveraging data to maintain digital resilience. Specifically, Splunk’s security capabilities will complement Cisco’s existing portfolio, providing leading security analytics and coverage from devices to applications to clouds. Additionally, the companies’ complementary capabilities will offer observability across hybrid and multi-cloud environments, enabling customers to deliver seamless application experiences.
The acquisition is expected to accelerate Cisco’s revenue growth and gross margin expansion, with the transaction not impacting Cisco’s previously announced share buyback program or dividend program. The boards of both companies have unanimously approved the acquisition, subject to regulatory approval and customary closing conditions. The deal is expected to close by the end of the third quarter of calendar year 2024.
Cisco will host a conference call on September 21, 2023, to discuss the transaction. Key advisors for the deal include Tidal Partners LLC, Simpson Thacher & Bartlett LLP, and Cravath, Swaine & Moore LLP for Cisco, and Qatalyst Partners, Morgan Stanley & Co. LLC, and Skadden, Arps, Slate, Meagher & Flom LLP for Splunk.
Overall, the acquisition of Splunk by Cisco represents a significant step towards enhancing security, observability, and digital resilience for organizations worldwide, leveraging the power of data and AI to drive customer outcomes and transform the industry.
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https://newsroom.cisco.com/c/r/newsroom/en/us/a/y2023/m09/cisco-to-acquire-splunk-to-help-make-organizations-more-secure-and-resilient-in-an-ai-powered-world.html
