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Cisco, a player in the tech industry, has just made its largest purchase to date – Splunk, for an astonishing $28B cash deal.

  • The Acquisition: Cisco’s acquisition of Splunk isn’t just about the numbers. Splunk brings to the table an exceptional observability platform that fits into Cisco’s security domain.
  • The Price: Cisco’s payout is a generous $157 per share, which is a significant increase compared to Splunk’s previous share prices in the high 80s and low 90s.
  • Rebranding: In the fiscal year 2022, Cisco took a significant step by rebranding its core switching and routing business, previously known as Infrastructure Platforms. The newly minted Secure, Agile Networks emphasizes the increasing importance of integrated security in networking equipment.
  • Performance Metrics: The rebranding seems to be bearing fruit, with revenues from the core business soaring by 22% in the fiscal year ending on July 29th, reaching a remarkable $29.1B while the security unit sales rose by 4% to $3.9B.
  • Stock Performance: Despite the positive changes and growth, Cisco’s shares have lagged behind the tech-dominant Nasdaq this year, with a modest rise of 12% compared to Nasdaq’s 27% jump.
  • Artificial Intelligence and Cybersecurity: The deal with Splunk paints a futuristic picture of AI playing a central role in bolstering cybersecurity. As Chuck Robbins, CEO of Cisco, articulates, the objective is to leverage AI for everything from threat detection and response to prediction and prevention.
  • Splunk’s Perspective: For Gary Steele, CEO of Splunk, the deal signifies a monumental leap in Splunk’s growth narrative, promising shareholder value and fortifying organisations globally.
  • Breakup Fees: If the deal falls through, termination fees are set at $1.48B from Cisco and $1B from Splunk.

This acquisition is a part of Cisco’s strategic shift towards enhancing its cybersecurity offerings, as the public cloud continues to consume more of its traditional back-end business. This move signals a significant pivot for the company, as it seeks to establish itself as a major player in the cybersecurity landscape.

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