Cisco to buy cybersecurity company Splunk for $28B

Cisco Systems has agreed buy cybersecurity firm Splunk for about $28 billion US in its biggest-ever deal to beef up its software business and capitalize on the rising use of artificial intelligence, the companies said on Thursday.

Splunk shares jumped 23 per cent in premarket trading, but were still about $10 below Cisco’s offer price of $157 per share in cash. Cisco’s stock was down nearly 5 per cent.

“Combined, Cisco and Splunk will become one of the world’s largest software companies and will accelerate Cisco’s business transformation to more recurring revenue,” the companies said in a joint statement.

The deal, which was unanimously approved by the boards of both Cisco and Splunk, is expected to close by the end of the third quarter of 2024 subject to regulatory approvals.

Cisco said the transaction was expected to be cash flow positive and would add to gross margin in the first fiscal year after closing the deal. Additionally, it will accelerate Cisco’s revenue growth and gross margin expansion.

If the deal is shelved, Cisco is liable to pay a termination fee of $1.48 billion.