Cisco ( CSCO ) is raising $28 billion on Splunk to protect corporate data in the fast-moving era of generative AI, and the Federal Reserve isn’t worried that keeping interest rates up for a longer period of time will dampen profits on its new monster deal.
“I don’t think so,” Cisco CFO Scott Herren told Yahoo Finance Live when asked if another rate hike from the Fed was a threat to getting the deal done. “When I talk to my peers, CFOs at other companies, I think we’re all watching the environment. It’s time to be prudent. But they’re not going to stop. They’re not going to close business. They never will, by the way. Time for what’s coming with the FOMC. I’m never going to try to do that.”
Herren said the Fed has yet to trigger a “significant” economic slowdown.
On Thursday, Cisco finally did his thing A deal that has been talked about for a long time Splunk for security player. Cisco is valuing Splunk at $28 billion, or $157 a share, a 31% premium to Wednesday’s closing price.
The company will finance the transaction with a mix of cash and new debt.
“The strategic combination of Splunk’s leading SIEM solution to predict and defend against threats across Cisco’s broad security portfolio makes sense for us,” Guggenheim analyst John Defucci said in a client note.
Herren told Yahoo Finance Live that Cisco has no plans to end its stock buyback plan and that there will be “rivalry” between the two businesses — mostly on revenue.
Because of Splunk’s “small” business in the country, no approval from the Chinese government is required for the deal, Herren said.
The deal is expected to close in nine to 12 months.
Splunk stock rose 21 percent to $144.85, while Cisco stock fell more than 3 percent.
Brian Sozzi Yahoo Finance is the editor-in-chief. Follow Sozzi on Twitter @BrianSozzi And on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email [email protected]
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