Silicon Valley giant Cisco announced Thursday it agreed to buy analytics and artificial intelligence-powered cybersecurity firm Splunk for $28 billion, marking one of the largest acquisitions of 2023 and the AI era.
Two Silicon Valley titans are joining forces.
The all-cash $157 per share deal represents a 31% premium from Splunk’s $119.59 share price at Wednesday’s close.
The acquisition positions Cisco to build the “next generation of AI-enabled security and observability,” Cisco CEO Chuck Robbins said in a statement accompanying the release.
Shares of Cisco slid 4% in premarket trading, while Splunk rallied 20%.
Cisco is among the largest and most profitable tech firms in the world with a $225 billion market capitalization as of Wednesday’s close and $12.6 billion in net income during its last fiscal year. Splunk, which was founded in 2003 and went public in 2012, reported a $63 million loss last quarter. Shares of Splunk were up nearly 40% this year prior to the proposed sale, enjoying the surge in investor interest in AI, though they remained nearly 50% below their 2020 peak. The deal comes during an unusually down stretch for M&A, as the first half of 2023 was the quietest period for M&A by total deal volume globally since the first half of 2020, according to PwC data.
The lack of recent M&A activity has been “surprising” but the Cisco and Splunk deal shows the “AI revolution has changed the game,” according to Wedbush analyst Dan Ives.
Eight. That’s how many times Cisco’s announcement of its Splunk acquisition referenced AI.