Cisco Systems has agreed buy cybersecurity firm Splunk for about US$28-billion (R532-billion) in its biggest-ever deal.
The acquisition will beef up Cisco’s software business and capitalise on the rising use of artificial intelligence, the companies said on Thursday.
Splunk shares jumped 23% in pre-market trading but were still about $10 below Cisco’s offer price of $157/share in cash. Cisco’s stock was down nearly 5%.
“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.
Read: Cisco made $20-billion approach to Splunk: report
If the deal is shelved, Cisco is liable to pay a termination fee of $1.5-billion.
Tidal Partners, Simpson Thacher & Bartlett and Cravath, Swaine & Moore were advisers to Cisco. Qatalyst Partners, Morgan Stanley and Skadden, Arps, Slate, Meagher & Flom advised Splunk. — Yuvraj Malik, (c) 2023 Reuters