Cisco Systems Inc. is embarking on its most substantial acquisition to date with a $28 billion deal to purchase cybersecurity company Splunk. This strategic move aims to reinforce Cisco's capabilities in software and AI-driven data analysis, fortifying its defenses against potential security risks.
In a significant development, Cisco Systems Inc. has unveiled its intention to acquire cybersecurity specialist Splunk in a landmark $28 billion agreement. This acquisition represents a major step into the realm of software and AI-driven data analysis for Cisco.
With this prominent acquisition, Cisco is poised to bolster its defensive capabilities against potential security threats, particularly in light of the expanding utilization of artificial intelligence.
In a prepared statement, Cisco Chair and CEO Chuck Robbins expressed that the integration of our collective capabilities will pave the way for the next era of AI-driven security and observability. He emphasized, "From identifying and responding to threats to anticipating and thwarting them, we are committed to bolstering the security and resilience of organizations, regardless of their size."
As outlined in the joint statement released on Thursday, Cisco will make a cash payment of $157 per share. This amount represents a substantial 31% premium over Splunk's closing stock price from the previous day. According to a report from Bloomberg, the total deal value accounts for approximately 10% of Cisco's overall market capitalization.
Cisco has been diversifying its portfolio by bolstering its software and services segment, reducing its dependence on its traditional networking hardware offerings.
Historically, the majority of Cisco's revenue stemmed from its networking hardware, which serves as the foundation of computer networks. However, the company's recent initiatives demonstrate a shift in this dynamic. In a notable move last month, Cisco highlighted its advancements in the fields of artificial intelligence and security technology.
This deal can be viewed as a significant wager on artificial intelligence, alongside its implications for the software and data security business.
At the outset of this year, Splunk unveiled a fresh line of AI solutions, designed to expedite the identification and response to data irregularities among other capabilities. In the joint statement released on Thursday, both companies asserted that this merger will substantially elevate the scale of their AI products and provide enhanced data visibility.
The acquisition has garnered approval from the boards of both organizations and is anticipated to be finalized by the conclusion of the third quarter in 2024. However, it still necessitates the green light from Splunk's shareholders.
During early morning trading on Thursday, Cisco Systems Inc. witnessed a nearly 4% drop in its stock value, while Splunk's shares surged by over 20%.
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