Cisco Systems, the world's leading networking and cloud solutions provider, announced on Monday that it has agreed to acquire Splunk Inc., the leader in data-to-everything platform, for $28 billion in cash and stock.

The deal, which is expected to close in the first quarter of 2024, will create a global leader in security and observability, according to the companies. Cisco will pay $157 per share for Splunk, a 25% premium over Splunk's closing price on Friday.

Cisco and Splunk CEOs said that the acquisition will enable them to deliver more value to their customers, partners, and employees, as they will combine their complementary technologies and capabilities to offer end-to-end visibility and intelligence across the entire digital ecosystem.
"AI is the future of our industry, and Splunk is at the forefront of it," said Chuck Robbins, chairman and CEO of Cisco. "By joining forces with Splunk, we will accelerate our innovation and create the most comprehensive and advanced platform for security and observability in the market."

Doug Merritt, president and CEO of Splunk, said that the deal will allow Splunk to scale faster and reach more customers worldwide. "We are thrilled to join Cisco, a company that shares our vision and values. He said, "we will empower our customers to turn data into action, insights, and outcomes," he said.

However, only some people are convinced that the deal is a good idea. Some analysts have doubts about the strategic fit between Cisco and Splunk, the high valuation of Splunk, and the potential integration challenges that may arise from merging two different cultures and business models.

Moreover, some Splunk shareholders have voiced their dissatisfaction with the deal, believing that it is worth more than what Cisco is paying and that it has more growth opportunities as an independent company. They also fear that Cisco may be unable to retain Splunk's talent and culture, which are key drivers of its success.

The deal is subject to regulatory approvals and customary closing conditions. Cisco expects the deal to accrue to its non-GAAP earnings per share in fiscal year 2025.