Cisco Systems announced the acquisition of cybersecurity firm Splunk for approximately $28 billion. This is its largest acquisition to date and is designed to strengthen its software portfolio and take advantage of the emerging field of artificial intelligence. Under the terms of the deal, Cisco will pay $157 in cash for each share of Splunk, a 31% premium to the closing share price before the deal was announced, creating one of the largest software conglomerates in the world.

Founded in 2003, Splunk provides companies with tools to analyze massive amounts of data to identify potential security threats that could impact their operations. Today, Splunk has approximately 8,000 employees and serves 230,000 users worldwide, with more than 90 Fortune 100 companies relying on its services. Splunk excels in two specific areas that fit into Cisco's existing product portfolio, whose current security products focus on detection and response, or monitoring the behavior of devices on a network to identify suspicious activity and alert a company's IT department. Splunk performs incident and event management, which means it records and tracks every action on the network. It determines where requests originate from and what service or software initiated them, collecting a huge amount of data in the process.

Although Cisco has made significant acquisitions in the past, the purchase of Splunk is the largest in its nearly 40-year history. In 2012, Cisco acquired NDS, a TV software company, for $5 billion, and in 2017, Cisco bought AppDynamics, an enterprise software company, for about $3.7 billion. Splunk's acquisition is one of the most significant technology deals this year in an otherwise subdued M&A environment, primarily due to increased financing costs associated with higher interest rates and a more restrictive antitrust environment.