Cisco is digging deep into its pockets to spend approximately $3.7 billion (£2.94 billion) on business software firm AppDynamics—an apparently bold bid to make the networking giant more attractive to large enterprise customers.
AppDynamics says it monitors the performance of its customers’ business applications to try to spot flaws and performance issues before they happen.
The $3.7 billion deal is a mixture of cash and “assumed equity awards” and is expected to close in the firm’s third quarter of this year, subject to regulatory approval and other closing conditions.
It plans to create a new software business arm of Cisco’s existing Internet of Things and apps division.
He added: “The combination of Cisco and AppDynamics will allow us to provide end to end visibility and intelligence from the network through to the application.”
Software creator AppDynamics to be acquired by Cisco in a $3.7 billion deal
However, with the slow shift to digital world, Cisco is changing track and announced their plan to shift to software in 2016.
In one of the largest acquisitions in the Tech world in recent times, Cisco plans on acquiring the software and app creator AppDynamics in a deal valued in billions.
While an amount of $1.72 billion was expected by AppDynamics as a reult of the IPO the deal with Cisco nearly doubles the amount.
AppDynamics is a relatively new software development business founded in 2008 and is responsible for controlling the website backends.
The valuation of the deal at $3.7 billion is high – much higher than what was expected to be raised through the IPO.
Cisco to buy AppDynamics for $3.7 billion in growth push
HIGH PRICE BUT SOFTWARE REVENUE POSITIVEThe $3.7 billion offer from Cisco is nearly double the $1.9 billion valuation AppDynamics received in its last financing round in November 2015.
Cisco swooped in to buy AppDynamics the day before the San Franciso-based firm was planning to price its long-planned IPO.
FILE PHOTO – The logo of Dow Jones Industrial Average stock market index listed company Cisco is seen in San Diego, California April 25, 2016.
Cisco’s offer comes out to roughly $26 per share, higher than the estimated $12 to $14 per share range it was planning.
REUTERS/Jim Young/File PhotoSAN FRANCISCO Cisco Systems Inc (CSCO.O) said on Tuesday that it agreed to buy U.S. business software company AppDynamics Inc for about $3.7 billion, making one of its largest deals of recent years as it searches for growth beyond its core networking business.