Cisco is buying the cybersecurity firm Splunk in a $28 billion deal as it bolsters its defenses against security threats that may be heightened by the widening use of artificial intelligence.
The Silicon Valley networking tech giant will pay $157 per Splunk Inc. share.
"Our combined capabilities will drive the next generation of AI-enabled security and observability," Cisco Chairman and Chief Executive Officer Chuck Robbins said in a prepared statement.
"From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient."
Dan Ives of Wedbush sees the transaction as a smart move for Cisco.
"Cisco is focused on the next generation of AI-enabled security. ... Splunk's well regarded unique platform makes this the right move at the right time for Cisco in our view and an aggressive strategic play in cybersecurity," Ives wrote in a note to clients.
"For Cisco this is a shot across the bow at Palo Alto, Checkpoint, Crowdstrike, Microsoft, Zscaler and others that the tech stalwart is not sitting idle in this market and now is making an aggressive play to gain market share in the coming years."
The boards of both companies approved the acquisition, which is expected to close by the end of 2024's third quarter. It still needs approval from Splunk shareholders.
Splunk, based in San Francisco, is known for data observability services, which allow companies to monitor internal systems for network health, cybersecurity risks and other insights. It competes with companies like Datadog and Dynatrace.
The deal is a bet on information technology departments increasing their investment in data management services, driven in part by economywide excitement in artificial intelligence.
"The IT landscape is changing faster than we've ever seen -- with hyper-connectivity, AI and increasing cyberthreats, the value of data only increases, and that's why this deal makes sense," Robbins said.
Information for this article was contributed by Bloomberg News (WPNS).