Following the closing of this acquisition, Splunk's President and CEO, Gary Steele, will join Cisco's Executive Leadership Team and report to Chair and CEO Chuck Robbins.
This acquisition is expected to strengthen Cisco's position in AI, security, and observability, enhancing organizations' digital resilience and security, it is said in the press release. It will also contribute to Cisco's strategy to securely connect devices and drive recurring revenue.
"We're excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability," said Chuck Robbins, Chair and CEO of Cisco. "From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient."
The deal is anticipated to be cash flow positive and gross margin accretive in the first fiscal year after closing and non-GAAP EPS accretive in the second year. It will facilitate revenue growth and gross margin expansion for Cisco.
Combined, Cisco and Splunk will become one of the world's largest software companies.
Cisco shares fell more than 3% on the news while Splunk surged over 20%. Congressman Ro Khanna was buying Cisco shares this year while his colleagues Zoe Lofgren, Tommy Tuberville, and Rob Wittman were seen selling shares.