Shares of Splunk (NASDAQ: SPLK) surged more than 20% to $145 on Thursday after the networking technology giant Cisco Systems (NASDAQ: CSCO) announced that it has reached an agreement to buy cybersecurity company Splunk for about $28 billion. The deal is the largest technology transaction of the year.

The deal, which values each Splunk share at $157, is expected to close by the end of the third quarter of 2024. In the meantime, Cisco stock dipped almost 4% after the company announced the biggest acquisition in Cisco’s history. The deal will strengthen Cisco’s software business and revenue growth exceptionally on the boom of AI.

“We’re excited to bring Cisco and Splunk together. Our combined capabilities will drive the next generation of AI-enabled security and observability,” Cisco Chair and CEO Chuck Robbins said in a prepared statement.

Splunk is a cloud computing and cyber security specialist, which helps companies monitor their systems for cybersecurity risks and other threats. Splunk’s platform uses AI and machine learning to produce automated and accurate threat detection procedures. The Nasdaq-listed company employs over 7,500 people worldwide. Upon completion of the deal, Splunk CEO Gary Steele will join Cisco's executive leadership team. He will report to CEO Chuck Robbins.

"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,” Splunk CEO, Gary Steele said. “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,” – Steele added.

The acquisition has been unanimously approved by the boards of directors of both Cisco and Splunk. However, the transaction is subject to regulatory approval and approval by Splunk's shareholders.

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