Cisco Buys Splunk for $28 Billion, Betting Big on Data and Security

Cisco completed its $28 billion acquisition of the data analytics company Splunk on Monday, making a major push into the rapidly growing markets for cybersecurity and observing the digital operations of companies and organisations.

The deal, one of the largest in the technology industry in recent years, underscores how critically important data has become as companies ramp up their use of artificial intelligence and other data-hungry technologies. Cisco, long dominant in computer networking equipment, is positioning itself to capitalise on those trends.

“We are thrilled to officially welcome Splunk to Cisco,” Chuck Robbins, Cisco’s chair and chief executive, said in a statement. “As one of the world’s largest software companies, we will revolutionise the way our customers leverage data to connect and protect every aspect of their organisation as we help power and protect the AI revolution.”

With Splunk, Cisco gains software that helps companies monitor their digital operations, detect cyber threats and investigate security incidents across their networks, applications and devices. Splunk’s data collection and analysis tools are used by over 90 of the Fortune 100 companies.

“Uniting Splunk and Cisco will bring tremendous value to our joint customers worldwide,” said Gary Steele, the executive who will lead Splunk inside Cisco. “The combination will provide truly comprehensive visibility and insights across an organisation’s entire digital footprint.”

Cisco paid $157 per share for Splunk, whose stock had traded around $65 a share before reports emerged about a potential sale. The price tag highlights the high premiums being paid for companies in strategically important fields.

Through the acquisition, Cisco gains a major analytics platform to help companies make sense of the reams of data being generated by the billions of digital devices, clouds and apps used by businesses and organisations. With artificial intelligence taking on a bigger role, having the right data pipelines and analysis tools is seen as crucial.

“Effective use of the right data at massive scale is critical to enable the meaningful benefits of AI and help organisations drive outcomes never before possible,” Robbins said.

Robbins argued that Cisco, with its networking equipment installed across corporate and institutional networks, is now “uniquely poised” to integrate Splunk’s data capabilities with its core offerings to create what he described as “unparalleled visibility and insights” for customers.

“To truly reap the benefits of AI, organisations need the infrastructure to power it, the data to develop it, a security platform to protect it, and an observability platform to monitor and manage it in real time,” he said. “Cisco will be able to do all four together.”

Cisco’s goal is to create an integrated platform for better networking, security, observability for tracking performance of apps and systems, and tapping into artificial intelligence. Robbins said Cisco and Splunk combined would allow “customers to do things that weren’t possible before.”

Stephen Elliot, an analyst at the research firm IDC, said, “Cisco has created a unique set of solutions for networking, security and operations executives in the market.”  

Cisco said the deal would add to its revenue growth and profit margins. Splunk’s stock will cease trading on the Nasdaq exchange.

The deal pushes further consolidation in the cybersecurity industry, a decade after Cisco paid nearly $3 billion for the security firm Sourcefire. It follows recent large acquisitions by Microsoft, Google and others to beef up their data analytics, artificial intelligence and cloud computing capabilities.

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