Splunk's CEO, Gary Steele, will join Cisco's executive leadership team after the acquisition. The deal is seen as the "next phase" of Splunk's growth journey, with the combined capabilities of the two companies expected to drive the next generation of AI-enabled security and observability. Both companies' shares reacted to the news, with Splunk's rising by about 21% and Cisco's falling by around 4%.
Key takeaways:
- Cisco is acquiring cybersecurity software firm Splunk in a $28 billion deal, the largest in Cisco's history, to boost its software business with new AI-enabled security technology.
- The acquisition price for Splunk is $157 per share, a roughly 30% premium to its Wednesday closing price, valuing Splunk at roughly six times its fiscal 2025 revenues.
- If either company backs out of the deal, Cisco would need to pay Splunk $1.48 billion, and Splunk would have to pay Cisco $1 billion, according to an SEC filing.
- The deal may spark a wave of mergers and acquisitions in the broader tech space over the next six to nine months, as larger firms compete in the AI and cyber security arms races.