The acquisition, which is expected to close by the end of the third quarter of calendar 2024, aims to accelerate Cisco's business transformation towards more recurring revenues. Cash flow is expected to be positive and gross margin higher in the first fiscal year following closing. Non-GAAP earnings per share are expected to grow in the second year, accelerating sales and gross margin growth. Splunk shares were trading at USD 119.59 prior to the announcement, representing a valuation of around $20 billion. Splunk shares have fluctuated between USD 25 ten years ago and USD 225 in September 2020.
Cyber threat prevention
Gary Steele, Splunk's current CEO, will join the Cisco management team reporting to Chuck Robbins, Cisco CEO. "We are excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-based security and observability," said Robbins.
The union of these two companies aims to move from threat detection and response to threat prediction and prevention. This combination of leaders in AI, security and observability will help make organizations safer and more resilient.
Transaction to be completed by the end of summer 2024
The transaction will not affect Cisco's previously announced share repurchase or dividend program. The acquisition has been unanimously approved by the Boards of Directors of Cisco and Splunk. It is expected to close by the end of the third quarter of calendar 2024, subject to regulatory approval and other customary closing conditions, including Splunk shareholder approval.