Cisco Systems Inc. has announced that it will buy cybersecurity firm Splunk in a $28 billion deal. The purchase is going to be Cisco’s biggest acquisition yet. Cisco buying Splunk would also mean a massive push into software and artificial intelligence-powered data analysis.
Cisco’s latest deal would mean a foray into bolstering its efforts in defenses against potential security threats that may be heightened by the widening use of artificial intelligence.
“Our combined capabilities will drive the next generation of AI-enabled security and observability,” Cisco Chair and CEO Chuck Robbins said in a prepared statement, according to AP.
“From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.”
Cisco will pay $157 a share in cash, the companies said in a statement Thursday, or a 31% premium to Splunk’s previous closing price on Wednesday. The deal value represents roughly 10% of Cisco’s market value, according to a Bloomberg report.
Cisco has been expanding its software and services business in an attempt to rely less on its hallmark networking hardware.
The Silicon Valley giant has traditionally generated the bulk of its revenue from equipment that forms the backbone of computer networks, but that’s been changing. Last month Cisco outlined the headway it’s making in artificial intelligence and security technology.
The deal is also arguably just as much a bet on artificial intelligence as it is on the business of software and data security.
Earlier this year, Splunk announced a new line of AI offerings that it said would, among other things, allow companies to detect and respond to anomalies in their data faster. The merger offers the companies’ AI products “substantial scale” and more visibility into data, they said in Thursday’s statement.
The boards of both companies approved the acquisition, which is expected to close by the end of 2024’s third quarter. It still needs approval from Splunk shareholders.
