Digital communications giant Cisco Systems (CSCO) is buying cybersecurity software company Splunk (SPLK) for $157 U.S. a share in an all-cash deal worth $28 billion U.S.
The deal represents a 31% premium to the current price of Splunk’s stock, which ended trading on September 20 at $119.59 U.S. per share.
Cisco said in a news release that it expects the deal to be cash flow positive and gross margin accretive in the first year following the closing of the acquisition.
Splunk is a cybersecurity firm that helps companies monitor and analyze their data and minimize the risk of hacks and cyberattacks.
Cisco is one of the world’s largest telecommunications and networking equipment vendors, with annual sales of more than $55 billion U.S.
If Cisco backs out of the deal, or is forced to do so by regulators, it will pay Splunk a termination fee of $1.48 billion U.S., according to the companies.
Should Splunk back out of the deal for any reason, it will pay a $1 billion U.S. break-up fee to Cisco.
The acquisition, which is subject to regulatory approval, is expected to close in the second half of 2024.
Cisco System’s stock has risen 34% in the past 12 months to $55.50 U.S. per share.
Prior to today (September 21), Splunk’s stock had gained 38% over the last year and was trading at $119.59 U.S. a share.
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