Cisco signaled it intends to reshape safe info and occasion administration (SIEM) by pulling the set off on a deal to accumulate Splunk for $28 billion. The all-cash settlement, introduced right now, requires Cisco to buy Splunk shares at $157 every, a 31% premium over the closing worth of Splunk’s inventory on Wednesday.
The deal can be Cisco’s largest up to now. Whereas rumors surfaced in early 2022 that the 2 corporations had been in acquisition talks, no deal materialized. Shortly after, Splunk tapped longtime Proofpoint CEO Gary Steele as its CEO. Steele mentioned he’ll be a part of Cisco after the transaction closes.
Including Splunk may considerably increase Cisco’s already formidable cybersecurity safety portfolio. “Our mixed capabilities will create an end-to-end information platform to boost digital resiliency,” mentioned Cisco chairman and CEO Chuck Robbins throughout an investor name to announce the deal. Robbins anticipates the deal will shut within the third quarter of 2024, pending shareholder and regulatory approvals.
Though regulators worldwide have extra intensely scrutinized and sometimes nixed many massive offers lately, Robbins is assured they may clear this deal. Emboldening his confidence is that the settlement does not need to be permitted in China as a result of Splunk has a minimal presence there.
Whereas getting massive offers permitted by regulators within the US and Europe has additionally grow to be tougher, Robbins argued that there is little overlap between the 2 corporations’ choices.
“By the mixing of Cisco’s prolonged detection and response platform, our greatest safety insights, and Splunk safety info and occasion administration providing, we can assist our prospects transfer from risk detection and response to risk prediction and prevention,” Robbins mentioned.
Deal Comes as a Shock
There was little latest indication that Cisco was considering a take care of Splunk, which mande the announcement a shock to trade watchers. In a LinkedIn put up, Omdia managing principal analyst Eric Parizo referred to as the Cisco-Splunk deal “a real bombshell transfer that may have a seismic affect on the whole enterprise cybersecurity panorama,” including it could foreshadow extra consolidation.
Parizo believes the deal will place Cisco as one of many dominant gamers in next-generation SIEM (NG-SIEM), a market that Omdia forecasts will develop to just about $4 billion in international annual income by 2027. “Splunk’s established place as a premium providing with the deep assets of Cisco’s international salesforce ought to current rapid upsell alternatives,” he provides.
Forrester analyst Allie Mellen agrees the deal may very well be a big boon for Cisco’s safety efforts, however the impact on safety practitioners stays to be seen. Mellen warns that Cisco has a checkered previous with a few of its largest acquisitions.
“Cisco has lengthy been a case examine for acquisitions that do not stay as much as their preliminary promise and undergo from underinvestment and a scarcity of focus,” Mellen says. “To maintain Splunk’s large, loyal person base, Cisco must let Splunk ship what Splunk does finest: a versatile, highly effective SIEM and observability providing.”
Fueling Subsequent-Era SIEM
The deal comes amid a rising highlight on next-generation SIEM and organizations needing to maneuver from legacy platforms to those who assist multicloud and cloud-native purposes and infrastructure. It additionally comes as platform suppliers are increasing their XDR capabilities.
For instance, at this week’s CrowdStrike Fal.Con 2023 convention in Las Vegas, CrowdStrike launched the “Raptor” model of its Falcon platform, which integrates an enhanced iteration of LogScale, the corporate’s NG-SIEM providing. LogScale is the outgrowth of CrowdStrike’s $400 million acquisition of logging and occasion administration supplier Humio. Designed to ingest petabytes of third-party information, CrowdStrike’s Raptor launch gives real-time occasion info natively in Falcon.
Over time, CrowdStrike CEO George Kurtz asserted SIEM will likely be subsumed into XDR. “XDR, in my view, will exchange SIEM; name it next-gen SIEM,” Kurtz mentioned throughout a media briefing this week. “[Customers] need the power to ingest information at scale … to retailer that information, [and] they need the power to look that information and question it,” he mentioned. “They usually need the power to take an motion, and if we put it multi functional spot.”
Analysts say CrowdStrike’s objectives are formidable. “LogScale is a primary step towards SIEM, however is basically extra of a proprietary log administration system tailor-made for its personal options,” Parizo notes. “But when it has the bandwidth and urge for food to shortly atone for SIEM, there are actually viable acquisition targets on the market.”
Mellen notes that the majority XDR distributors have shifted to having a SIEM or a SIEM-alternative of their portfolio. “This can be a large shift out there that provides CrowdStrike and different XDR distributors a chance to make use of to their benefit,” she says.
Cisco’s acquisition of Splunk would give Cisco “either side of the coin: XDR with Cisco XDR, and a SIEM with Splunk,” she provides.
Roger Thornton, basic companion at VC agency Ballistic Ventures, believes that within the quick time period, prospects might grow to be extra open to various SIEM choices. “Prospects, notably large ones, do not prefer it when their favourite distributors get acquired,” Thornton says. “Integration all the time has an affect on assist, account administration, and the senior sponsors. It’s going to undoubtedly give Google Chronicle SIEM and Microsoft one thing to speak about with the Splunk put in base.”
