The purchase price implies a premium of 31.3% on Splunk's September 20 closing of $119.59.

The transaction will likely 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.

Upon the close of the acquisition, Splunk CEO Gary Steele will join Cisco's Executive Leadership Team, reporting to Chair and CEO Chuck Robbins.

"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."

The transaction will likely close by the end of the third quarter of calendar year 2024, subject to regulatory approval and other customary closing conditions.

Cisco held $26.1 billion in cash and equivalents as of July 29.

Price Actions: SPLK shares traded higher by 21.6% at $145.42 premarket on the last check Thursday. CSCO shares traded lower by 4.86% at $52.80.