Cisco offers over $20 billion for Splunk takeover

Cisco Systems Inc. reportedly made a huge bid to acquire Splunk Technology software company. The San Jose, California-headquartered tech firm was said to have recently made an offer amounting to more than $20 billion to takeover Splunk.

According to The Wall Street Journal, sources revealed that Cisco Systems made the offer even though it is not in active talks for acquisition with Splunk. If everything goes well and a deal is reached, this would be the former’s biggest acquisition ever.

It was mentioned that so far, Cisco System’s largest acquisition to date is its purchase of Scientific Atlanta, a US-based telecommunications equipment company, in 2005, where it invested around $7 billion. This was followed by the company’s more recent transaction that cost almost $5 billion, which is the purchase of Acacia Communications Inc. last year.

Splunk, just like the other tech companies with high growth potential, showed a sharp increase in shares in the early stage of the pandemic. However, most of them have also fallen since then, and the drastic decrease was almost in half.

At any rate, while Cisco Systems has already expressed its interest in buying Splunk, it was not mentioned if other companies are also interested. It is possible that there the software firm has other potential suitors for a takeover.

While the reports of Cisco’s interest in Splunk are going around, the latter is currently looking for a new chief who can replace Doug Merritt, who left his CEO role in November. Merrit served the company for about six years, but the series of disappointing earnings reports led him to step down. As of the moment, Graham Smith, the company’s chairman, has been appointed as interim CEO.

Meanwhile, Cisco Systems said last year that it would be overhauling its financial reporting segments to show the growth of its software unit. The firm’s chief financial officer, Scott Herren, previously explained at that time that the goal for this plan is to exhibit Cisco’s gradual shift toward software. This business accounted for 30% of the company’s total revenue in fiscal 2021.

CNBC reported that shares of Splunk climbed as much as 14% in extended trading shortly after the WSJ published about Cisco System’s multi-billion offer to acquire the company.