Cisco has announced a definitive agreement with Splunk, under which it will acquire the latter for $157 per share in cash, representing approximately $28 billion in equity value. Upon the close of the acquisition, Gary Steele, president and chief executive officer (CEO), Splunk, will join Cisco’s executive leadership team reporting to Chuck Robbins, chairman and CEO, Cisco.

According to Cisco and Splunk, their complementary capabilities will provide observability across hybrid and multi-cloud environments enabling the company’s customers to deliver smooth application experiences that power their digital businesses. The two companies are well-positioned to help customers responsibly harness the power of AI given their substantial scale, visibility into data, and foundation of trust. The union of these two organisations will allow for greater investments in new solutions, accelerated innovation, and increased global scale to support the needs of customers of all sizes. The acquisition builds on Splunk’s heritage of helping organisations enhance their digital resilience and will accelerate Cisco’s strategy to securely connect everything to make anything possible. The combination of these two established leaders in artificial intelligence (AI), security and observability will help make organisations more secure and resilient.

Commenting on the acquisition, Chuck Robbins said, “We are excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability. From threat detection and response to threat prediction and prevention, we will help make organisations of all sizes more secure and resilient.”

Meanwhile, Gary Steele said, “Uniting with Cisco represents the next phase of Splunk’s growth journey, accelerating our mission to help organisations worldwide become more resilient, while delivering immediate and compelling value to our shareholders. Together, we will form a global security and observability leader that harnesses the power of data and AI to deliver excellent customer outcomes and transform the industry. We are thrilled to join forces with a long-time and trusted partner that shares our passion for innovation and world-class customer experience, and we expect our community of Splunk employees will benefit from even greater opportunities as we bring together two respected and purpose-driven organizations.”

The acquisition has been unanimously approved by the boards of directors of both Cisco and Splunk. It is expected to close by the end of the third quarter of the calendar year 2024, subject to regulatory approval and other customary closing conditions including approval by Splunk shareholders. The transaction is expected to be cash flow positive and gross margin accretive in the first fiscal year post-close, and non-generally accepted accounting principles (GAAP) earnings per share (EPS) accretive in year two. Additionally, it will accelerate Cisco’s revenue growth and gross margin expansion. The transaction will not impact Cisco’s previously announced share buyback program or dividend program.