Cisco Systems has acquired cybersecurity firm Splunk for $28 billion. The deal is Cisco’s largest acquisition ever and is seen as a major move by the company to strengthen its software business and capitalize on the boom in artificial intelligence.
Splunk is known for its expertise in data observability, which helps companies monitor their systems for cybersecurity risks and other threats. The company operates a subscription-based pricing model for customers.
Cisco CEO Chuck Robbins said that the acquisition is a good fit for both companies as they share a common vision of helping customers secure their data and operations in a rapidly changing digital world.
“The thing that gives you conviction is we are bringing together two companies around security and observability, which are two of the most important areas for our customers and areas where they are unlikely to cut spending in – just because of the criticality of these threats,” Robbins said.
The deal is also seen as a way for Cisco to reduce its reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a post-pandemic slowdown in demand.
“Cisco is looking to diversify its business away from hardware and more towards software and services,” said Dan Ives, an analyst at Wedbush Securities. “This deal gives them a major boost in the cybersecurity and observability market.”
The deal is expected to close in the third quarter of next year.