With Cisco Systems Inc.’s pending acquisition of Splunk Inc., the networking giant is making another major step toward becoming a software company.
On Thursday, Cisco CSCO, -3.89% said it was buying Splunk SPLK, +20.77% in a deal valued at about $28 billion, or $157 a share in cash, for the cloud-security company. The match had been speculated about for years, and Cisco has been on a buying binge this year, as it seeks to grow with more security and software offerings.
“Together, we will become one of the largest software companies globally,” Cisco Chief Executive Chuck Robbins said on a conference call with analysts early Thursday. “The combination of Cisco and Splunk further enhances and accelerates our strategy to securely connect to make everything possible.”Upon closing sometime next year, Cisco said it expects the deal will add an additional $4 billion in annual recurring revenue and will drive more software sales. In fiscal 2023, ended Jan.
Another factor playing a role in the deal is artificial intelligence, which Cisco told analysts it plans to layer on top of data. Malik noted that the combination with Splunk will enable Cisco to have “a security operations-center intelligence, AI products, as well as a policy AI product, which when combined will be timely given the emergence of Gen AI.”
While Cisco potentially acquiring Splunk has been bandied about for years, it’s likely that the big push in the enterprise market toward more artificial intelligence was one big factor in finally moving the companies together. Whatever the actual driver, investors for the most part were pleased that Cisco is getting more software in its portfolio, especially security-focused software.
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