Cisco makes largest ever acquisition, buying cybersecurity company Splunk for $28 billion in cash
Cisco is acquiring cybersecurity software company Splunk for $157 per share in a cash deal worth about $28 billion, the company said Thursday, in its largest acquisition ever.
Splunk shares rose 21% after the announcement, while Cisco shares fell 4%.
Splunk’s technology helps businesses monitor and analyze their data to minimize the risk of hacks and resolve technical issues faster. Cisco has long been the world’s largest maker of computer networking equipment and has been bolstering its cybersecurity business to meet customer demands and fuel growth.
Cisco CEO Chuck Robbins emphasized the importance of artificial intelligence and using the power of AI that comes with Splunk’s technology to protect networks.
“Our combined capabilities will drive the next generation of AI-enabled security and observability,” Robbins said, in a statement. “From threat detection and response to threat prediction and prevention, we will help make organizations of all sizes more secure and resilient.”
The deal is expected to close in the third quarter of 2024, and Cisco says it should improve gross margins in the first year and non-GAAP earnings in year two.
The purchase price is equivalent to about 13% of Cisco’s market cap, a big number for a company that has historically avoided blockbuster deals. Prior to Splunk, Cisco’s biggest deal ever was the $6.9 billion purchase of cable set-top box maker Scientific Atlanta in 2006. At the time, Cisco’s market cap was just over $100 billion.
But as the public cloud has gobbled more of Cisco’s traditional back-end business, the company has needed to find new and big revenue streams. Cybersecurity has been the biggest bet.
In fiscal 2022, Cisco changed the name of its core switching and routing business from Infrastructure Platforms to Secure, Agile Networks, focusing on the need to have security built into networking gear. The company has a separate reporting unit called End-to-End Security, consisting specifically of security products.
Revenue in the core business climbed 22% in the fiscal year ended July 29, to $29.1 billion, and the security unit saw sales rise 4% to $3.9 billion.
Cisco shares have underperformed the Nasdaq this year, rising 12% while the tech-heavy index has jumped 27%. Over the past five years, it’s been an even worse investment relative to the broader sector. The stock is up about 10% over that stretch, trailing the Nasdaq’s 66% gain.
Splunk logo displayed on a phone screen and a laptop keyboard are seen in this illustration photo taken in Krakow, Poland on October 30, 2021. (Photo by Jakub Porzycki/NurPhoto via Getty Images)
Jakub Porzycki | Nurphoto | Getty Images
Robbins told CNBC’s “Squawk on the Street” on Thursday that he expects organizational synergies between Cisco and Splunk to become clear within 12 to 18 months. The company will finance the deal with a combination of cash and debt, he said.
“Together, we will become one of the largest software companies globally,” Robbins said in a conference call with analysts.
Following the announcement, some analysts raised concerns about potential product overlap, regulatory scrutiny and the price Cisco paid. Oppenheimer’s Ittai Kidron noted on the call that Splunk’s pivot to the cloud has been “underwhelming.”
In recent years, Splunk turned away from an on-premises “customer-managed” approach to focus on a cloud-oriented offering.
Splunk CEO Gary Steele, who will join Cisco’s executive team after the deal closes, said on the call with analysts that, “We still have many large customers who are very dependent upon the capabilities that we allow for in a customer managed environment.”
Steele joined Splunk a little over a year ago. Prior to that, he was CEO of Proofpoint, a cybersecurity firm that was acquired by private equity firm Thoma Bravo in 2021 for $12.3 billion.
If Cisco backs out of the deal or if it’s blocked by regulators, Cisco will pay Splunk a termination fee of $1.48 billion, according to a regulatory filing. Should Splunk walk away, it will pay a $1 billion breakup fee to Cisco.
In 2023, Cisco has acquired four companies focused on security: Armorblox, a threat detection platform; Oort, which does identity management; and Valtix and Lightspin, both in cloud security.
Tidal Partners, Simpson Thacher, and Cravath, Swaine & Moore advised Cisco. Qatalyst Partners, Morgan Stanley, and Skadden, Arps, Slate, Meagher & Flom advised Splunk.
CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit, at Carnegie Mellon University in Pittsburgh, Pennsylvania, U.S., July 15, 2025.
Nathan Howard | Reuters
It’s been a tough November for Palantir.
Shares of the software analytics provider dropped 16% for their worst month since August 2023 as investors dumped AI stocks due to valuation fears. Meanwhile, famed investor Michael Burry doubled down on the artificial intelligence trade and bet against the company.
Palantir started November off on a high note.
The Denver-based company topped Wall Street’s third-quarter earnings and revenue expectations. Palantir also posted its second-straight $1 billion revenue quarter, but high valuation concerns contributed to a post-print selloff.
In a note to clients, Jefferies analysts called Palantir’s valuation “extreme” and argued investors would find better risk-reward in AI names such as Microsoft and Snowflake. Analysts at RBC Capital Markets raised concerns about the company’s “increasingly concentrated growth profile,” while Deutsche Bank called the valuation “very difficult to wrap our heads around.”
Adding fuel to the post-earnings selloff was the revelation that Burry is betting against Palantir and AI chipmaker Nvidia. Burry, who is widely known for predicting the housing crisis that occurred in 2008 and the portrayal of him in the film “The Big Short,” later accused hyperscalers of artificially boosting earnings.
Palantir CEO Alex Karp vocally hit the front lines, appearing twice in one week on CNBC, where he accused Burry of “market manipulation” and called the investor’s actions “egregious.”
“The idea that chips and ontology is what you want to short is bats— crazy,” Karp told CNBC’s “Squawk Box.”
Despite the vicious selloff, Palantir has notched some deal wins this month. That included a multiyear contract with consulting firm PwC to speed up AI adoption in the U.K. and a deal with aircraft engine maintenance company FTAI.
But those announcements did little to shake off valuation worries that have haunted all AI-tied companies in November.
Across the board, investors have viciously ditched the high-priced group, citing fears of stretched valuations and a bubble.
In November, Nvidia pulled back more than 12%, while Microsoft and Amazon dropped about 5% each. Quantum computing names such as Rigetti Computing and D-Wave Quantum have shed more than a third of their value.
Apple and Alphabet were the only Magnificent 7 stocks to end the month with gains.
Sill, questions linger over Palantir’s valuation, and those worries aren’t a new concern.
Even after its steep price drop, the company’s stock trades at 233 times forward earnings. By comparison, Nvidia and Alphabet traded at about 38 times and 30 times, respectively, at Friday’s close.
Karp, who has long defended the company, didn’t miss an opportunity to clap back at his critics, arguing in a letter to shareholders that the company is making it feasible for everyday investors to attain rates of return once “limited to the most successful venture capitalists in Palo Alto.”
“Please turn on the conventional television and see how unhappy those that didn’t invest in us are,” Karp said during an earnings call. “Enjoy, get some popcorn. They’re crying. We are every day making this company better, and we’re doing it for this nation, for allied countries.”
Palantir declined to comment for this story.
WATCH: Palantir CEO Alex Karp: We’ve printed venture results for the average American
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