Follow Us:
Friday, May 27, 2022

Cisco Systems to buy AppDynamics for $3.7 bn in growth push

Cisco Systems said that it agreed to buy US business software company AppDynamics Inc for about $3.7 billion,

By: Reuters |
January 25, 2017 10:11:11 am
Cisco, Cisco Systems, AppDynamics, AppDynamics acquired by Cisco, Cisco System AppDynamics, AppDynamics Cisco deal, AppDynamics deal Cisco Systems Inc said that it agreed to buy US business software company AppDynamics Inc for about .7 billion. (Source: Reuters)

Cisco Systems Inc said on Tuesday that it agreed to buy US 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.

Legacy technology players like Cisco have been trying to shift their strategy to stay ahead of technology developments, such as the rise of cloud computing, that could otherwise threaten their core businesses.
Cisco’s announcement comes a week after Hewlett Packard Enterprise Co said it would buy cloud startup SimpliVity for $650 million in cash.

President Donald Trump’s plan to incentivise US companies to repatriate their overseas cash could spur a new wave of dealmaking for large tech companies like Cisco, analysts say.  Rob Salvagno, Cisco’s vice president of corporate development, said in an interview that the acquisition fits Cisco’s long-term direction and its transition toward software.

Watch all our videos from Express Technology

Best of Express Premium
What makes KuCoin P2P Trading Platform a Good Choice To Buy Crypto?Premium
Airtel Demonstrates Immersive Video Entertainment On 5G; Recreates Kapi...Premium
Is It A Good Idea To Keep One Account For All Your Financial Transactions?Premium
Touching The Sky : SIMS, Pune Alumni On A Path To Make A DifferencePremium

AppDynamics makes software that manages and analyzes applications and it has about 2,000 paying customers, including NASDAQ Inc, Nike Inc and its new owner, Cisco. Cisco swooped in to buy AppDynamics the day before the San Franciso-based firm was planning to price its long-planned IPO. The company has been on its road show with investors.

“The fact that they were in their IPO process represented a window where we needed to make a decision,” Cisco’s Salvagno said.

HIGH PRICE BUT SOFTWARE REVENUE POSITIVE

The $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’s offer comes out to roughly $26 per share, higher than the estimated $12 to $14 per share range it was planning.

“Cisco made an offer that people felt was compelling,” said Ravi Mhatre, a board member at AppDynamics from LightSpeed Venture Partners.

RBC analyst Mitch Steves said in a research note that while the price for AppDynamics “appears to be high,” he views more software revenue as a positive for Cisco.

AppDynamics will become part of Cisco’s Internet of Things and Applications Unit, reporting to Rowan Trollope. Cisco’s last large acquisition, Jasper, is also part of that unit.

It is Cisco’s largest acquisition since it bought security company Sourcefire for $2.7 billion in 2013.
Goldman Sachs, Morgan Stanley and Qatalyst advised AppDynamics while Fenwick & West was Cisco’s legal adviser.

The deal, which is a mix of cash and equity, is expected to close by April.

Latest Comment
View All Comments
Post Comment
Read Comments

Get the best of Tech news all week
delivered to you

For all the latest Technology News, download Indian Express App.

  • Newsguard
  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
  • Newsguard

Featured Stories

'Rajiv Kapoor said I may be Raj Kapoor's son but I have nothing': Dalip T...
Shah Rukh Khan reveals wife Gauri Khan's rules inside their home Mannat: ...
Shah Rukh Khan says he has TVs worth Rs 30-40 lakh in Mannat, fan reacts,...
After Express report, IAS officer Sanjeev Khirwar transferred to Ladakh, ...
Two Cannes red carpet looks, one gorgeous Deepika Padukone. No surprise t...
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
X