What is going on with Splunk (NASDAQ:SPLK) stock this morning? Shares of the software solutions company are up over 8% after it was reported that Cisco (NASDAQ:CSCO) had made an offer to acquire Splunk. Cisco was reportedly willing to pay more than $20 billion to take over Splunk, according to people familiar with the matter.
However, the two companies are not currently in active talks, so it seems that Cisco is simply putting an offer on the table. Moreover, Splunk has a market capitalization of about $19 billion, which means that a $20 billion buyout would only imply a premium of roughly 3% from current prices. Moving higher, a $25 billion buyout would imply a premium of about 28%. If Splunk accepts Cisco’s offer, it would be Cisco’s largest buyout since its acquisition of Scientific Atlanta in 2005.
Morgan Stanley analyst Meta Marshall believes that a Splunk buyout by Cisco would be “strategically positive.” The analyst adds that “an ability to package Splunk’s leading Security analytics and ITOM solutions with other security offerings, further optimize distribution and pricing, could present very interesting potential M&A synergies for Cisco.”
So, what else should investors know about the potential SPLK stock takeover news? Let’s jump right in.
SPLK Stock: Splunk Surges on Cisco Takeover Offer
- Splunk was founded in 2003 as a software data analytics and monitoring company.
- The company is currently in the process of finding a new CEO after Doug Merritt stepped down last November. Merritt had served as the CEO of Splunk for 6 years.
- Chairman Graham Smith is currently acting as the interim CEO.
- Last year, Splunk announced that investment firm Silver Lake had invested $1 billion into the software company.
- Shares of SPLK stock are down 30% from its 52-week high of $176. The company is set to report earnings on March 2.
- Cisco is working toward a shift to software and reoccurring revenue-based sales. By 2025, the company wants to generate 50% of its revenue from subscription-based offerings.
- When asked, representatives of Splunk and Cisco declined to comment on the matter.
- In addition, the two companies already have a data-security partnership to “enable analytics-driven insights and automation across Cisco’s industry-leading security, networking, wireless, data center and collaboration portfolios.”
- Mergers have been a hot commodity in recent months. In 2021, $2.6 trillion of merger deals were announced, up 76% year-over-year.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.