Cisco To Acquire Splunk (NASDAQ: SPLK) In A $28 Billion Cash Deal: What Investors Need To Know

Benzinga

Cisco Systems Inc (NASDAQ:CSCO) agreed to acquire Splunk Inc (NASDAQ:SPLK) for $157 per share in cash, representing approximately $28 billion in equity value, triggering a rally in Splunk's stock prices. Meanwhile, Cisco stock prices fell.  The purchase price implies a premium of 31.3% on Splunk's September 20 closing of $119.59.

Transcript

00:00 Cisco to acquire Splunk to help make organizations more secure and resilient in an AI powered world

00:06 proposed deal for a hundred and fifty seven dollars a share in cash

00:11 Representing 28 billion in equity value who got the better deal here Splunk or Cisco?

00:18 Definitely not Cisco shareholders again

00:21 but

00:23 This was rumored last year not Cisco to be the acquire but Splunk was rumored a couple of times to be bought last

00:31 Year, I can remember talking about it on the show. So this has been rumored around

00:36 I

00:38 Don't know if anybody was speculating ahead of it

00:41 Obviously I had the earnings gap there back in August and held that pretty well

00:45 Really wasn't selling off with the overall market. So technically it actually was relatively strong

00:51 Sometimes you see these deals and you're like well, nobody saw this one coming

00:54 I mean they were buying this thing really wasn't selling off even the last few days didn't sell off much. So

00:59 Definitely seems like some sneaky buyers in here, but holy, you know 157 nice premium here Joel

01:05 Cisco probably the stock get talked about now because this is gonna go off the board the Splunk deal 157

01:13 I don't see a lot of any trust issues here

01:15 So I wouldn't be surprised if you do see this pop substantially obviously maybe into the 150s

01:19 I don't think there's gonna be a little big discount here for antitrust

01:22 Cisco getting whacked down to box here paying a huge premium

01:27 All cash there goes a lot of their cash Cisco thoughts one on the free room to Cisco Trading Act

01:34 Wow, it's uh, you know

01:36 first of all

01:37 We were looking for peers and it's tough because the peers we were looking at are some big old companies your

01:43 Adobe's and your CRFs

01:46 Secondly full disclosure. I've owned Cisco for a really long time

01:50 I think in the low 40s have just watched it go up and down hasn't been a great, you know a super great investment

01:57 But I'm up on it. This doesn't really change anything. I

02:00 Like the move I mean they you know in this environment

02:05 They must be extremely confident that this is something they can really add to the bottom line

02:10 And when's the last time Cisco made a deal I kid like I go long

02:15 Yeah, yeah, so the price action is you know, they're hitting the acquire

02:20 I don't think anyone's gonna come in at a higher price

02:23 Technically speaking if you got caught short in the earnings gap. Well, this is your opportunity as that gap gets filled at

02:32 Right here. What's the high in that day? Oh way up there at 53 52

02:37 So if the street likes this deal and I don't know if it's gonna be today tomorrow next week

02:42 You know, it's gonna it's gonna form a base. It's gonna form three or four lows

02:47 It's gonna find support and turn back higher if the if the street doesn't like the report or doesn't like the deal

02:54 then it won't see 55 50 for a while, but

02:58 Really on this kind of day to like when you don't announcing it the market circumstances and everything. Yeah

03:05 It's a bull move. I I'm happy as a Cisco shareholder. I'm happy what that means

03:12 Is probably not a whole lot

03:14 Maybe long-term happy short-term traders and Cisco obviously are not happy if they're long it with the stock getting hit down two dollars and forty

03:23 Cents. I mean it's been relatively strong very strong old-school tech has basically any kind of value tech lower PE tech

03:30 Has actually been

03:32 Relatively strong compared to a lot of other stocks here. You're getting whacked. Is there a spot spot a technical level here?

03:40 Yes, CEO throw back to you money Mitch here. You do the technicals as well

03:44 Obviously do a great job with them. Is there a spot you'd be looking at this, you know from a retracement standpoint

03:51 I'm maybe buying the dip here or you just hands off on something like this

03:54 You got to let it kind of leak a little bit

03:58 Give it some time get some sideways action because right now you're kind of in the middle of the monthly charts and when you're in

04:05 The middle of the monthly charts. What are you?

04:07 Pretty much probably a pig right now, right?

04:10 Whether you you see it like that or not. I never like to be in the middle of those charts

04:15 So you guys see the right chart you're in the middle of it. Yeah. Oh, yeah

04:20 That's the problem there is that I don't feel like you're with the bulls or the bears. You're kind of yeah

04:25 And I'm just not in the buying mood either. I think 50 bucks

04:29 Maybe if you got down to 50 maybe you think about it, but I just don't know

04:32 I'm in the buying mood for anything here, and I'm not surprised that they're punishing this. I'm actually surprised

04:38 It's all cash if it was a stock deal. They'd hit it more because sometimes on the stock deals obviously now there's risk ARBs involved

04:45 You know bringing stocks down so I don't have to bring the Splunk up as much

04:48 So the whole cash deal helps it but big lot of cash gone

Category

Transcript

Recommended