Cisco (Nasdaq: CSCO) has agreed to acquire Splunk (Nasdaq: SPLK) for approximately $28 billion in a transaction that will enable the San Jose, California-based technology company to expand its capabilities meant to help organizations harness the power of artificial intelligence to improve security and digital resilience.
The boards of directors of Cisco and San Francisco-based Splunk have unanimously approved the $157-a-share deal, which is expected to be finalized by the end of the third quarter of 2024, the companies said in a joint release published Thursday.
“Our combined capabilities will drive the next generation of AI-enabled security and observability,” said Chuck Robbins, chair and CEO of Cisco.
“From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient,” added Robbins.
Upon the deal’s closing, Gary Steele, president and CEO of Splunk, will directly report to Robbins as a member of Cisco’s executive leadership team.
Splunk and Cisco will form a combined entity that will offer security analytics, observability across multicloud and hybrid environments and other capabilities that will help organizations leverage data to enhance security.
The transaction is still subject to approval by Splunk shareholders and regulatory clearances and is expected to be gross margin accretive and cash flow positive in the first fiscal year post-close and non-GAAP earnings per share accretive in the second year.
Tidal Partners and Simpson Thacher & Bartlett respectively serve as financial adviser and legal counsel to Cisco, while Cravath, Swaine & Moore acts as regulatory counsel to the company.
Splunk’s financial advisers in the transaction are Qatalyst Partners and Morgan Stanley & Co. Skadden, Arps, Slate, Meagher & Flom serves as legal counsel to the software company.