Sept 21 Reuters Cisco Systems has agreed to buy cybersecurity firm Splunk for about 28 billion in its biggestever deal to beef up its software business and capitalize on the rising use of artificial intelligence, the companies said on Thursday.

The deal will help reduce Cisco39;s reliance on its massive networking equipment business, which has suffered in recent years from supply chain issues and a postpandemic slowdown in demand.

Cisco offered 157 in cash for each share of Splunk, representing a 31 premium to the company39;s last closing price.

Splunk shares jumped 23 to trade 9 short of the offer price before the opening bell, while Cisco dropped nearly 5.

Combined, Cisco and Splunk will become one of the world39;s largest software companies and will accelerate Cisco39;s business transformation to more recurring revenue, a joint statement said.

Cisco already has a datasecurity partnership with Splunk, whose more than 15,000 customers include many prominent companies such as CocaCola, Intel and Porsche.

After a surge in revenue growth last year to nearly 40, Splunk has grappled with an industrywide slowdown in demand in 2023 wrought by rising interest rates and sticky inflation.

Its acquisition will accelerate revenue growth and gross margin expansion at hardwarereliant Cisco in the first fiscal year after the deal39;s close, according to the companies.

Cisco had also made a more than 20 billion approach for Splunk in 2022 but that fell apart, the Wall Street…