(New York) The specialist in business communications networks Cisco will pay $28 billion, financed entirely in cash, to acquire data analysis software publisher Splunk.
This transaction, announced Thursday by the two groups in a joint press release, offers Splunk shareholders $157 per share.
Around 12 p.m. (Eastern time), the stock jumped 21.26% to $145 while Cisco fell 4.24% to $53.15 on the New York Stock Exchange.
The transaction is expected to be completed by the end of the third quarter of 2024, following regulatory approvals and the green light from Splunk shareholders. It was unanimously approved by both boards of directors.
“United, Cisco and Splunk will help businesses move from threat detection and response to threat anticipation and prevention,” noted the two partners.
They assured that they would form “one of the largest software publishing companies in the world” which will “accelerate the transformation of Cisco’s business towards more recurring revenues”.
The transaction is expected to generate cash and a positive gross margin in the first fiscal year following completion, and net profit excluding exceptionals in the second year, according to the companies.
This operation “makes sense in light of our recent discussions with experts,” commented Third Bridge analyst Joseph Brunetto, recalling “rumors about Cisco seeking to buy Splunk for around $20 billion dating back to February 2022.”
This “fits with Cisco’s M&A strategy to expand its cybersecurity offering,” he added.
According to him, the share price “illustrates the operational efficiencies” initiated by Splunk boss Gary Steele.
This acquisition will not affect the share buyback program or the payment of dividends previously planned by Cisco, the groups assured.
According to its website, Splunk was founded in 2003 and holds more than 1,100 patents. The company, listed on NASDAQ, employs more than 7,500 people worldwide.
Its revenue reached $911 million in the second quarter, including $445 million from cloud computing services (29%), and a net loss of $63.25 million.
It expected turnover in the range of 3.92 to 3.95 billion for the year.
Founded in 1984, Cisco recorded 11% revenue growth to $57 billion in its lagged 2023 fiscal year ended July 29, and net profit of $12.6 billion (7%).