CA - Splunk Trading At An Implied Yield Close To 9.95% While Risk Is Mitigated
2024-01-29 12:17:09 ET
Summary
- Cisco Systems, Inc. is acquiring cybersecurity company Splunk Inc. for $30 billion, representing a 30% premium.
- The deal is expected to close within the 100 to 150-day window, potentially resulting in annualized returns of 10.07% to 43.68%.
- The HSR clearance and the cybersecurity sector's performance indicate a high likelihood of deal completion, estimated to be above 95%.
Cisco Systems, Inc. ( CSCO ) is buying the cybersecurity company Splunk Inc. (SPLK). Cisco is shelling out $30 billion, representing a 30% premium around that time (21 September 23). This translates into $157 per share, while currently, Splunk trades at $153.28, or a 2.43% upside if this deal closes as expected. What is remarkable about this transaction is how timely it was. Cisco paid a modest premium given this is usually considered a hot growth sector, and the sector has surged almost since the moment the deal was announced: