Cisco Splunk Acquisition

Cisco Splunk Acquisition

On 21st September 2023, Cybersecurity leader Cisco (NASDAQ:CSCO) announced their plans to acquire Splunk (NASDAQ:SPLK) for $157 per share in cash. The Cisco Splunk acquisition represented approximately $28 billion in equity value.

If you are not familiar with Cisco, the company is a leader in the Cybersecurity space, providing security solutions. They specializes in switches, routers, cybersecurity, and IoT (Internet-of-Things).

Splunk is an observability leader. The Splunk flagship engine collects, indexes and manages big data. Using the data collected, Splunk provide solutions that enables efficient application management, IT operations management, compliance and security monitoring.

After the acquisition of the two big leaders, Splunk’s President and CEO Gary Steele will report to Cisco’s Chair and CEO Chuck Robbins.

Why the Cisco Splunk Acquisition?

According to the press release, below are the benefits of this acquisition:

  • The combination of Cisco and Splunk’s capabilities will drive the next generation of AI-enabled security and observability.
  • Help move organizations from threat detection and response to threat prediction and prevention.

My US Stock Portfolio

US Portfolio_202210_October

The acquisition news came as a surprise or bonus for me as I held Splunk in my growth stock portfolio. Previously, I bought Splunk because it was undergoing a transformation to migrate its customers to a subscription model. The subscription model will boost Splunk’s annual recurring revenue.

Splunk SPLK Share Price 22 Sept 2023

As you can see from the 5 year share price of Splunk, it has underperformed despite its successful migration of its customers to the subscription model. Call it a lifesaver, the announcement of Cisco’s acquisition of Splunk pushed up its share price at least 20% to around US$144. At US$157 a share in cash, this represents a 31% premium to Splunk’s closing price on Wednesday.

The acquisition is expected to close by the end of the third quarter of calendar year 2024. As usual, the acquisition is subjected to regulatory approval and other customary closing conditions including approval by Splunk shareholders.

If acquisition plans go through, Splunk will most likely delist. I await to collect my US$157 per share.

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