Tech giant Cisco today announced its intention to acquire the cybersecurity and observability vendor Splunk for $157 per share in cash, representing an equity value of approximately $28 billion and making it one of the largest purchases in Cisco's history.

“Together we will become one of the largest software companies globally,” Cisco Chairman and CEO Chuck Robbins said in a conference call with analysts, saying that the combined capabilities of the two companies will “drive the next generation of AI-enabled security and observability.”

Headquartered in San Francisco and founded in 2003, Splunk offers a unified security and observability platform. The security vendor’s signature services are its security information and event management (SIEM) tools — Splunk Enterprise for on-premises or private cloud and cloud-based Splunk Cloud. The vendor had its initial public offering (IPO) in 2012, and as of July 31, 2023, its annual recurring revenue is $3.9 billion with 16% year-over-year growth.

Splunk President and CEO Gary Steele will join Cisco’s executive leadership team reporting to Robbins post-acquisition.

The deal is expected to close by the end of the third quarter of calendar year 2024, subject to regulatory approval and other customary closing conditions, including approval by Splunk shareholders.

The Splunk acquisition marks Cisco’s fifth security-related deal this year, including Oort in July for identity threat detection and response (ITDR) technology, Valtix in February for multicloud security, Lightspin in March for cloud security posture management (CSPM), and Armorblox in May for the use of generative artificial intelligence (AI) and large language models (LLMs) in security.

Robbins highlighted Splunk’s security, observability and artificial intelligence (AI) capabilities “complement” Cisco’s existing portfolio of these three areas.

Cisco announced its extended detection and response (XDR) service in April. Raj Chopra, SVP and chief product officer at Cisco Security told SDxCentral in an earlier interview that traditionally, SIEM focuses more on the “after-the-fact” such as log aggregation and forensics, while the scope of endpoint detection and response (EDR) narrows within the endpoints. On the other hand, XDR consumes more information for full-context and higher-fidelity detection and prioritizes appropriate response and remediation.

“Through the integration of Cisco's extended detection and response [XDR] platform, our best security insights and Splunk’s security information and event management [SIEM] offering, we will be able to help our customers move from threat detection and response to threat prediction and prevention,” Robbins said during today’s conference call about the acquisition.

Additionally, Cisco launched its Full-Stack Observability Platform in June based on its existing visibility and security capabilities.

“In terms of observability, our complementary capabilities will offer observability for the full IT stack, from the application to the network across hybrid and multicloud environments,” Robbins said.

The two companies plan to harness the power of data and AI to form a global security and observability leader, according Splunk's Gary Steele.

“In fact, this combination is about building on our customer promise, harnessing the power of data and AI, as we integrate our complementary capabilities to transform the modern-day tech economy,” Steele said. “Together we will capitalize on a significant opportunity to integrate and build on Splunk and Cisco's industry-leading solutions to apply AI to the security observability and network operations.”

Robbins noted, as he mentioned in the earnings call for the company’s last fiscal quarter, Cisco has already taken half a billion dollars of orders for AI infrastructure.

“We've discussed our huge opportunity and building out AI networks with hyperscalers,” he said. “There's also a huge opportunity with enterprises to help them responsibly unlock the opportunities that come with AI. Together with our visibility into the data, the substantial scale we bring, in a deep foundation of trust, we are very well-positioned to lead in this space.”