Splunk stock spikes after report of Cisco’s buyout offer

Chuck Robbins, CEO, Cisco Systems, speaking at the World Economic Forum, Davos, Switzerland, January 21, 2020.

Splunk shares jumped as much as 14% in extended trading Friday after the Wall Street Journal reported that Cisco made an offer to acquire the data analytics software company for more than $20 billion.

At the height of after-hours trading, Splunk was valued at more than $20 billion, up from $18.2 billion at the close of trading.

Representatives for Cisco and Splunk declined to comment.

Splunk’s software has gained popularity as a tool for detecting security threats. Cisco sought to expand its security business while selling data center networking equipment and Webex collaboration software.

Splunk’s stock is down 49% since hitting a record in September 2020. Shares are down 18% on November 15, after the company speak Chief Executive Officer Doug Merritt, who has run the company for six years, will step down immediately. The Board of Directors has appointed Chairman Graham Smith as interim CEO and has begun the search for a permanent replacement.

Splunk is in the process of shifting to providing cloud services to customers and said in December that nearly 37% of its most recent quarter revenue was tied to cloud usage.

Total revenue at Splunk was up 19% from a year earlier, while Cisco’s total revenue for the most recent quarter grew 8%. Cisco has long grown its business through acquisitions, and in 2020 it acquired network monitoring company ThousandEyes for about 1 billion dollars.

If a deal for Splunk is finalized, it will be Cisco’s largest-ever deal.

According to a follow-up report from BloombergNegotiations between the companies have broken down in recent weeks.

Read the Wall Street Journal report here.

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