News Summary
- Together, Cisco and Splunk will help move organizations from
threat detection and response to threat prediction and
prevention
- Combined, Cisco and Splunk will become one of the world's
largest software companies and will accelerate Cisco's business
transformation to more recurring revenue
- Expected to be cash flow positive and gross margin accretive in
first fiscal year post close, and non-GAAP EPS accretive in year 2.
Will accelerate revenue growth and gross margin expansion
- Unites two "Great Places to Work" with similar values, strong
cultures, and talented teams
- The combination of these two innovative leaders makes them well
positioned to lead in security and observability in the age of
AI
SAN
JOSE, Calif. and SAN
FRANCISCO, Sept. 21, 2023 /PRNewswire/ -- Cisco
(NASDAQ: CSCO) and Splunk (NASDAQ: SPLK), the cybersecurity and
observability leader, today announced a definitive agreement under
which Cisco intends to acquire Splunk for $157 per share in cash, representing
approximately $28 billion in equity
value. Upon close of the acquisition, Splunk President and CEO
Gary Steele will join Cisco's
Executive Leadership Team reporting to Chair and CEO Chuck Robbins.
The acquisition builds on Splunk's heritage of helping
organizations enhance their digital resilience and will accelerate
Cisco's strategy to securely connect everything to make anything
possible. The combination of these two established leaders in AI,
security and observability will help make organizations more secure
and resilient.
"We're excited to bring Cisco and Splunk together. Our combined
capabilities will drive the next generation of AI-enabled
security and observability," said Chuck
Robbins, chair and CEO of Cisco. "From threat detection and
response to threat prediction and prevention, we will help make
organizations of all sizes more secure and resilient."
"Uniting with Cisco represents the next phase of Splunk's growth
journey, accelerating our mission to help organizations worldwide
become more resilient, while delivering immediate and compelling
value to our shareholders," said Gary
Steele, president and CEO of Splunk.
"Together, we will form a global security and observability
leader that harnesses the power of data and AI to deliver excellent
customer outcomes and transform the industry. We're thrilled to
join forces with a long-time and trusted partner that shares our
passion for innovation and world-class customer experience, and we
expect our community of Splunk employees will benefit from even
greater opportunities as we bring together two respected and
purpose-driven organizations," Steele added.
In today's hyperconnected world, data is everywhere, with every
organization relying on it to run their business and make
mission-critical decisions every day. Factoring in the acceleration
and adoption of generative AI, expanding threat surfaces, and
multiple cloud environments, it creates a level of complexity that
is unlike anything organizations have faced. Organizations need a
better way to manage, protect, and unlock data's true value and
stay digitally resilient.
Together, Cisco and Splunk will address these challenges head
on.
The combination of these two established leaders with
complementary capabilities in AI, security and observability will
unlock the true value of data and will help make organizations of
all sizes more secure and digitally resilient.
Specifically, Splunk's security capabilities complement Cisco's
existing portfolio, and together, will provide leading security
analytics and coverage from devices to applications to clouds.
Cisco and Splunk's complementary capabilities will provide
observability across hybrid and multi-cloud environments enabling
the company's customers to deliver smooth application experiences
that power their digital businesses. Cisco and Splunk are well
positioned to help customers responsibly harness the power of AI
given their substantial scale, visibility into data, and foundation
of trust.
The union of these two organizations will allow for greater
investments in new solutions, accelerated innovation, and
increased global scale to support the needs of customers of all
sizes.
Cisco's acquisition of Splunk will also build upon both
companies' reputations for being purpose-driven with similar
values, strong cultures, and incredibly talented teams. The
acquisition will unite two "Great Places to Work" with a shared
passion for innovation and inclusion and will remain a great place
to work and the premier place for software talent.
Transaction Details
Under the terms of the agreement,
Cisco intends to acquire Splunk for $157 per share in cash, representing
approximately $28 billion in equity
value. The transaction is expected to be cash flow positive and
gross margin accretive in the first fiscal year post close, and
non-GAAP EPS accretive in year two. Additionally, it will
accelerate Cisco's revenue growth and gross margin expansion.
The transaction will not impact Cisco's previously announced
share buyback program or dividend program.
The acquisition has been unanimously approved by the boards of
directors of both Cisco and Splunk. It 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.
For further information regarding all terms and conditions
contained in the definitive agreement, please see Cisco's Current
Report on Form 8-K, which will be filed in connection with the
transaction.
Advisors
Tidal Partners LLC is acting as financial
advisor to Cisco, Simpson Thacher & Bartlett LLP is acting as
legal counsel, and Cravath, Swaine & Moore LLP is acting as
regulatory counsel. Qatalyst Partners and Morgan Stanley & Co.
LLC are acting as financial advisors to Splunk and Skadden, Arps,
Slate, Meagher & Flom LLP is acting as legal counsel.
Investor Conference Call Details
Cisco will host a
conference call for Thursday, September 21,
2023, at 5:15 am (PT) /
8:15 am (ET) to discuss this
transaction. Click to view the webcast. To listen via
Telephone:
- Dial in toll free: 800-369-2185
- Toll: 415-228-5002 (International callers)
- Passcode: 3985390
Conference call replay will be available approximately one hour
after the conclusion of the event from September 21, 2023, to October 5, 2023, at Toll Free 800-813-5527 / Toll
203-369-3347. The replay will also be available via webcast on the
Cisco Investor Relations website at https://investor.cisco.com.
Additional Resources:
About Cisco
Cisco (NASDAQ: CSCO) is the worldwide
technology leader that securely connects everything to make
anything possible. Our purpose is to power an inclusive future for
all by helping our customers reimagine their applications, power
hybrid work, secure their enterprise, transform their
infrastructure, and meet their sustainability goals. Discover more
on The Newsroom and follow us on Twitter at @Cisco. Cisco and the
Cisco logo are trademarks or registered trademarks of Cisco and/or
its affiliates in the U.S. and other countries. A listing of
Cisco's trademarks can be found at www.Cisco.com/go/trademarks.
Third-party trademarks mentioned are the property of their
respective owners. The use of the word partner does not imply a
partnership relationship between Cisco and any other company.
About Splunk
Splunk Inc. (NASDAQ:SPLK) helps build a
safer and more resilient digital world. Organizations trust Splunk
to prevent security, infrastructure and application issues from
becoming major incidents, absorb shocks from digital disruptions,
and accelerate digital transformation.
Cisco Forward-Looking Statements
This press release
may be deemed to contain forward-looking statements, which are
subject to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the
words "will," "believes," "plans," "anticipates," "expects,"
"estimates," "strives," "goal," "intends," "may," "endeavors,"
"continues," "projects," "seeks," or "targets," or the negative of
these terms or other comparable terminology, as well as similar
expressions) should be considered to be forward-looking statements,
although not all forward-looking statements contain these
identifying words. Readers should not place undue reliance on these
forward-looking statements, as these statements are the
management's beliefs and assumptions, many of which, by their
nature, are inherently uncertain, and outside of the management's
control. Forward-looking statements may include statements
regarding the expected benefits to Cisco, Splunk and their
respective customers from completing the transaction, the
integration of Splunk's and Cisco's complementary capabilities to
create an end-to-end platform designed to unlock greater digital
resilience for customers, plans for future investment and capital
allocation, the expected financial performance of Cisco following
the expected completion of the transaction, and the expected
completion of the transaction. Statements regarding future events
are based on the parties' current expectations, estimates and
projections and are necessarily subject to associated risks related
to, among other things, (i) the completion of the proposed
transaction on anticipated terms and timing, including obtaining
stockholder and regulatory approvals and other conditions to the
completion of the transaction, (ii) the effect of the announcement
or pendency of the proposed transaction on Splunk's business,
operating results, and relationships with customers, suppliers,
competitors and others, (iii) risks that the proposed transaction
may disrupt Splunk's current plans and business operations, (iv)
risks related to the diverting of management's attention from
Splunk's ongoing business operations, (v) the occurrence of any
event, change or other circumstances that could give rise to the
termination of the definitive agreement, (vi) the outcome of any
legal proceedings related to the transaction, (vii) the potential
effects on the accounting of the proposed transaction, (viii)
legislative, regulatory and economic developments, (ix) general
economic conditions, (x) restrictions during the pendency of the
proposed transaction that may impact Splunk's ability to pursue
certain business opportunities or strategic transactions, (xi) the
retention of key personnel and (xii) the ability of Cisco to
successfully integrate Splunk's market opportunities, technology,
personnel and operations and to achieve expected benefits.
Therefore, actual results may differ materially and adversely from
the anticipated results or outcomes indicated in any
forward-looking statements. For information regarding other related
risks, see the "Risk Factors" section of Cisco's most recent report
on Form 10-K filed on September 7,
2023, as well as the "Risk Factors" section of Splunk's most
recent reports on Form 10-Q and Form 10-K filed with the SEC on
August 24, 2023, and March 23, 2023, respectively. The parties
undertake no obligation to revise or update any forward-looking
statements for any reason, except as required by law.
Splunk Forward-Looking Statements
This press release
contains "forward-looking statements" within the meaning of the
federal securities laws, including Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. These forward-looking statements are based
on Splunk's current expectations, estimates and projections about
the expected date of closing of the proposed transaction and the
potential benefits thereof, its business and industry, management's
beliefs and certain assumptions made by Splunk and Cisco, all of
which are subject to change. In this context, forward-looking
statements often address expected future business and financial
performance and financial condition, and often contain words such
as "expect," "anticipate," "intend," "plan," "believe," "could,"
"seek," "see," "will," "may," "would," "might," "potentially,"
"estimate," "continue," "expect," "target," similar expressions or
the negatives of these words or other comparable terminology that
convey uncertainty of future events or outcomes. All
forward-looking statements by their nature address matters that
involve risks and uncertainties, many of which are beyond our
control, and are not guarantees of future results, such as
statements about the consummation of the proposed transaction and
the anticipated benefits thereof. These and other forward-looking
statements, including the failure to consummate the proposed
transaction or to make or take any filing or other action required
to consummate the transaction on a timely matter or at all, are not
guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed in any forward-looking
statements. Accordingly, there are or will be important factors
that could cause actual results to differ materially from those
indicated in such statements and, therefore, you should not place
undue reliance on any such statements and caution must be exercised
in relying on forward-looking statements. Important risk factors
that may cause such a difference include, but are not limited to:
(i) the completion of the proposed transaction on anticipated terms
and timing, including obtaining shareholder and regulatory
approvals, anticipated tax treatment, unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, economic performance, indebtedness, financial condition,
losses, future prospects, business and management strategies for
the management, expansion and growth of Splunk's business and other
conditions to the completion of the transaction; (ii) the impact of
the COVID-19 pandemic on Splunk's business and general economic
conditions; (iii) Splunk's ability to implement its business
strategy; (iv) significant transaction costs associated with the
proposed transaction; (v) potential litigation relating to the
proposed transaction; (vi) the risk that disruptions from the
proposed transaction will harm Splunk's business, including current
plans and operations; (vii) the ability of Splunk to retain and
hire key personnel; (viii) potential adverse reactions or changes
to business relationships resulting from the announcement or
completion of the proposed transaction; (ix) legislative,
regulatory and economic developments affecting Splunk's business;
(x) general economic and market developments and conditions; (xi)
the evolving legal, regulatory and tax regimes under which Splunk
operates; (xii) potential business uncertainty, including changes
to existing business relationships, during the pendency of the
merger that could affect Splunk's financial performance; (xiii)
restrictions during the pendency of the proposed transaction that
may impact Splunk's ability to pursue certain business
opportunities or strategic transactions; and (xiv) unpredictability
and severity of catastrophic events, including, but not limited to,
acts of terrorism or outbreak of war or hostilities, as well as
Splunk's response to any of the aforementioned factors. These
risks, as well as other risks associated with the proposed
transaction, are more fully discussed in the proxy statement to be
filed with the U.S. Securities and Exchange Commission in
connection with the proposed transaction. While the list of factors
presented here is, and the list of factors presented in the proxy
statement will be, considered representative, no such list should
be considered to be a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward looking statements.
Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include,
among other things, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on Splunk's
financial condition, results of operations, or liquidity. Splunk
does not assume any obligation to publicly provide revisions or
updates to any forward-looking statements, whether as a result of
new information, future developments or otherwise, should
circumstances change, except as otherwise required by securities
and other applicable laws.
Non-GAAP Information
This press release includes
future estimated non-GAAP EPS information. Non-GAAP measures are
not in accordance with, or an alternative for, measures prepared in
accordance with generally accepted accounting principles (GAAP) and
may be different from non-GAAP measures used by other companies. In
addition, non-GAAP measures are not based on any comprehensive set
of accounting rules or principles. Cisco believes that non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with Cisco's results of operations as determined
in accordance with GAAP and that these measures should only be used
to evaluate Cisco's results of operations in conjunction with the
corresponding GAAP measures. Cisco believes that the presentation
of non-GAAP measures provides useful information to investors and
management regarding financial and business trends relating to its
financial condition and its historical and projected results of
operations. We have not reconciled future estimated non-GAAP EPS
information included in this presentation to the most directly
comparable GAAP measure because this cannot be done without
unreasonable effort because we do not currently have sufficient
data to accurately estimate the individual adjustments included in
the most directly comparable GAAP measure that would be necessary
for such reconciliations. We expect the variability of these items
to have a potentially unpredictable, and a potentially significant,
impact on our future GAAP financial results.
Additional Information and Where to Find It
In
connection with the proposed transaction and required stockholder
approval, Splunk will file with the SEC a preliminary proxy
statement and a definitive proxy statement. The proxy statement
will be mailed to the stockholders of Splunk. Splunk's stockholders
are urged to carefully read the proxy statement (including all
amendments, supplements and any documents incorporated by reference
therein) and other relevant materials filed or to be filed with the
SEC and in their entirety when they become available because they
will contain important information about the proposed transaction
and the parties to the transaction. Investors may obtain free
copies of these documents (when they are available) and other
documents filed with the SEC at its website at www.sec.gov. In
addition, investors may obtain free copies of the documents filed
with the SEC by Splunk by going to Splunk's Investor Relations page
on its corporate website at https://investors.splunk.com or by
contacting Splunk Investor Relations at ir@splunk.com.
Participants in the Solicitation
Splunk and its
executive officers and directors may be deemed to be participants
in the solicitation of proxies from Splunk's stockholders with
respect to the transaction. Information about Splunk's directors
and executive officers, including their ownership of Splunk
securities, is set forth in the proxy statement for Splunk's 2023
Annual Meeting of Stockholders, which was filed with the SEC on
May 9, 2023, Form 8- K filed with the
SEC on September 21, 2023, and
Splunk's other filings with the SEC. Investors may obtain more
detailed information regarding the direct and indirect interests of
Splunk and its respective executive officers and directors in the
transaction, which may be different than those of Splunk
stockholders generally, by reading the preliminary and definitive
proxy statements regarding the transaction, which will be filed
with the SEC. In addition, Cisco and its executive officers and
directors may be deemed to have participated in the solicitation of
proxies from Splunk's stockholders in favor of the approval of the
transaction. Information concerning Cisco's directors and executive
officers is set forth in Cisco's proxy statement for its 2022
Annual Meeting of Stockholders, which was filed with the SEC on
October 18, 2022, annual report on
Form 10-K filed with the SEC on September 7,
2023, Forms 8-K filed with the SEC on February 21, 2023, July
19, 2023, and September 21,
2023, and Cisco's other filings with the SEC. These
documents are available free of charge at the SEC's website at
www.sec.gov or by going to Cisco's Investor Relations website at
https://investor.cisco.com.
Media contacts:
Robyn Blum
Cisco Public Relations
408-930-8548
rojenkin@cisco.com
Mara Mort
Splunk Public Relations
(415) 850-8645
press@splunk.com
Investor Relations contacts:
Marilyn Mora
Cisco Investor Relations
1 (408) 527-7452
marilmor@cisco.com
Splunk Investor Relations
ir@splunk.com
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SOURCE Cisco Systems, Inc.