Cisco Systems, the technology conglomerate, has been in talks with software company Splunk about its purchase, although no deal is currently on the table, two people familiar with the matter told DailyExpertNews on Friday.
A deal may not materialize at all, but if talks resume, Cisco could pay more than $20 billion for Splunk, one of the people said.
Splunk, whose stock price has fallen 30 percent since CEO, Doug Merritt, unexpectedly stepped down in November, has a market cap of about $18 billion. Cisco’s market cap is $227 billion.
The people asked for anonymity because the information is confidential. Cisco did not immediately respond to a request for comment, while a Splunk spokesperson said the company did not comment on rumors or speculation. The Wall Street Journal reported on a possible deal earlier on Friday.
Splunk — named after caving, the sport of cave exploration — mines data for insights, including security threats, a business that grew in importance as the coronavirus pandemic quickly forced many workers online. More recently, it has been trying to switch to cloud computing and catch up with its competitors such as Datadog, who started their business in the cloud. In June, private equity firm Silver Lake invested $1 billion in Splunk to help with that transition.
Cisco is known as a serial acquirer, which effectively uses acquisitions to complement research and development. His previous deals include Acacia, a maker of optical network components; Luxtera, a semiconductor company; and ThousandEyes, a cloud intelligence company. Its chief executive, Chuck Robbins, told analysts in December that Cisco would continue to look for security acquisitions.
Technology has been a hotbed of mergers and acquisitions in the past year as rising stock prices have left companies with cash. Microsoft said last month it planned to acquire video game company Activision Blizzard for nearly $70 billion, and Salesforce acquired workplace software company Slack for $27.7 billion last year.