Cisco Systems, the world’s largest networking equipment company, announced on Thursday that it has agreed to buy Splunk, a leading provider of analytics and security software, for $28 billion in cash. The deal, which is Cisco’s largest acquisition ever, is expected to close in the first half of 2024.
Cisco said the acquisition will enhance its portfolio of security and observability solutions, which help customers monitor, analyze and protect their data and applications across hybrid cloud environments. Splunk’s software collects and correlates data from various sources, such as logs, metrics, traces and events, and uses artificial intelligence (AI) to provide insights and alerts.
Cisco CEO Chuck Robbins said the deal will create a “powerful combination” that will enable customers to “accelerate their digital transformation, simplify their IT operations and strengthen their security posture”. He added that Splunk’s AI capabilities will complement Cisco’s own AI initiatives, such as its recent acquisition of Kenna Security, a risk-based vulnerability management platform.
Splunk CEO Doug Merritt says AI is the future of cybersecurity
Splunk CEO Doug Merritt, who will join Cisco as a senior vice president and general manager of the security and observability business, said the deal will bring together two “innovation leaders” that share a common vision of using AI to solve complex problems.
Merritt said AI is the future of cybersecurity, as it can help detect and respond to threats faster and more effectively than human analysts. He said Splunk’s software can help customers leverage AI to automate tasks, optimize workflows and reduce costs.
Merritt also said the deal will benefit Splunk’s customers, partners and employees, as they will gain access to Cisco’s global scale, resources and expertise. He said Splunk will continue to operate as an independent brand within Cisco, and will maintain its open and flexible approach to data integration and collaboration.
Analysts and investors react positively to the deal
The deal was well received by analysts and investors, who praised Cisco’s strategic move to diversify its revenue streams and boost its growth prospects. Cisco’s stock rose 3.2% on Thursday, while Splunk’s stock soared 23.7%.
Daniel Ives, an analyst at Wedbush Securities, said the deal was a “game changer” for Cisco, as it will give it a “dominant position” in the fast-growing security and observability market. He said the deal will also help Cisco fend off competition from rivals such as Microsoft, Amazon Web Services and VMware.
Patrick Moorhead, an analyst at Moor Insights & Strategy, said the deal was a “smart move” for Cisco, as it will enhance its software capabilities and expand its customer base. He said the deal will also create synergies and cross-selling opportunities between Cisco’s and Splunk’s products and services.