Splunk Inc (NASDAQ:SPLK) made significant headway in the opening minutes on Monday, amid word Cisco Systems (N\ASDAQ: CSCO) was making a $20-billion takeover bid for the stock.
Splunk is currently searching for a CEO after Doug Merritt stepped down in November after roughly six years following dismal earnings reports. Splunk named Chairman Graham Smith as interim CEO.
Splunk makes software for companies’ information technology and security operations to monitor and analyze data.
Cisco, run by CEO Chuck Robbins, sells routers, switches and security services, and software products.
Cisco already has a data-security partnership with Splunk. It looks to introduce new financial metrics and overhaul its reporting segments to showcase the growth of its software business.
Jefferies analyst Brent Thill notes that he has a Buy rating and a price target of $160 (39.7% upside) on Splunk’s shares.
While the two companies are not yet reported to be in talks, the analyst thinks “certainly strategic value” in a potential deal.
While the news is purely speculation, Thill believes that Cisco is a strategic buyer of Splunk and that the transaction would have a lot of potential synergies.
The Cisco-Splunk deal would also help alleviate investors’ concerns regarding the search for a new Splunk CEO, the issues associated with a cloud model transition, and general loss in mindshare.
SPLK shares traded higher by $7.84, or 6.9% at $122.35 early Monday, while those for Cisco lost 98 cents, or -1.8%, to $52.92.
