Cisco Said to Have Discussed Splunk Bid Before Talks Broke Down

(Bloomberg) -- Cisco Systems Inc. held talks with Splunk Inc. about a takeover that could have been its biggest deal ever, but the discussions fell apart in recent weeks, according to people familiar with the situation. 

The companies are no longer in talks about a deal, and it’s unclear whether Cisco is still interested in Splunk, said the people, who asked not to be identified because the matter is private. The Wall Street Journal previously reported on the discussions, saying that Cisco offered more than $20 billion for the software company. That sent shares of Splunk up as much as 16% in late trading Friday.

Cisco and Splunk declined to comment.

Cisco, which is set to report its latest results next week, has been expanding its software and services -- an attempt to rely less on its hallmark networking hardware. The company gave a lackluster forecast for revenue in November, hurt by a shortage of components.

The Silicon Valley giant has traditionally generated the bulk of its revenue from equipment that forms the backbone of computer networks, but that’s been changing. Revenue from subscriptions and software will reach 50% of Cisco’s total by fiscal 2025, the company predicted in September.

A Splunk deal would have been Cisco’s largest acquisition yet, well above its takeover of Scientific Atlanta for about $7 billion in 2006.

Splunk, meanwhile, announced last year that private equity firm Silver Lake was investing $1 billion in the company. 

News of the deal talks sent Splunk shares as high as $133.25. The stock had closed at $114.51 on Friday, down about 1% this year. Cisco slipped in late trading, falling less than 1%. It was down 15% this year through the close.

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