Cisco confirms that they are ready to acquire Splunk (a cybersecurity company) for $157 per share. The deal will be done through cash payment.
The deal has been finalized between Cisco and Splunk, and Cisco will acquire the firm at the rate of $157/share. The overall cash deal will be worth $28 billion. Cisco announced the deal on Tuesday. This deal affected the shares market tremendously, as the Splunk share rose 20%. On the other hand, a dip of 5% in Cisco shares. According to the CEO and chair of Cisco, Chuck Robbins, the deal will be closed in 2024’s third quarter.
Cisco chair and CEO said, “From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.” According to this deal, Cisco has committed that the finances will be in the form of cash and debt payments.
Cisco expects two fantastic benefits from this deal. The first one is the positive cash flow. Second, it will help improve gross margins. More importantly, this deal will be accretive to manage non-GAAP earnings per share of Cisco. This result is expected to come in the first year after closing the deal. Robbins said related to this development, “Together, we will become one of the largest software companies globally.” He was on a call with analysts who joined him through a conference call.
Analysts have mixed opinions about this deal. Some analysts think that some issues, including regular scrutiny and potential overlap, can be developed. Some experts have concerns about the price Cisco will pay. One analyst thinks that this deal can affect the importance of cloud computing. It means the deal is underwhelming.
Splunk is one of the firms that focus more on an on-premise customer-management approach. However, they changed the focus, and they were more dependent on cloud-oriented offerings recently.
Gary Steele, the CEO of Splunk, was also in the discussion with analysts. He said, “We still have many large customers who are very dependent upon the capabilities that we allow for in a customer-managed environment.”
Splunk is one of the most reliable and established cybersecurity companies that helps companies minimize risk hacks through proper data monitoring and analysis. It means they have the expertise in resolving technical issues. On the other hand, Cisco is a renowned name for making and providing networking equipment and telecommunications. Moreover, it offers a complementary software suite.
Gary Steele, the CEO of Splunk, is a renowned name in the cybersecurity industry, as he was the CEO of Proofpoint, another reliable cybersecurity firm. He joined Splunk over a year ago. According to the deal, Cisco will pay $1.48 billion as a termination fee to Splunk in case of backing up. Conversely, if Splunk backs off, it will pay $1 billion as a breakup fee to Cisco.