Splunk soars on Cisco takeover in $28 billion AI cloud security deal

Updated at 8:20 am EDT

Splunk  (SPLK) - Get Free Report shares surged on the Nasdaq Thursday after the AI and data-focused cloud computing group agreed to a $28 billion takeover by Cisco Systems  (CSCO) - Get Free Report.

Cisco said it would pay $157 per share, in cash, for San Francisco-based Splunk, a 32% premium to the group's Wednesday closing price and a level that values it at around $28 billion. Cisco said the deal will form a global leader in "security and observability" that uses AI technology to ward off threats in cloud computing environments.

The deal is expected to close in 2024 and won't affect Cisco's dividend or share buyback plans, the company said.

"We're excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability," said Cisco CEO Chuck Robbins. "From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient." 

Splunk shares were last marked 22% higher in pre-market trading after their trading halt was lifted on the Nasdaq to indicate an opening bell price of $146.00 per share. Cisco Systems, meanwhile, was marked 5% lower at $52.71 per share.

Last month, posted better-than-expected fiscal-fourth-quarter earnings and touted its potential in leveraging AI technologies in accelerating near-term profits.

"The acceleration of AI will fundamentally change our world and create new growth drivers for us,' Robbins told investors on a conference call.

"This is a huge opportunity for Cisco, and we are laser-focused on leading and winning in this space," he added. "As a result of our innovation in this area, we expect ethernet will lead in connecting AI workloads over the next five years."

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