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Cisco Systems announced earlier this week that it will be buying AppDynamics, the software company, in a $3.7 billion acquisition deal.
AppDynamics, Inc. is a San Francisco, California-based company. It is specialized in APM and ITOA. APM is application performance management. And ITOA is IT Operations Analytics.
The privately held company was founded in 2008. AppDynamics is focused on the following action. It manages the availability and performance of various applications. The process is followed across data centers and cloud computing environments.
AppDynamics generated a $158.4 million revenue in the first nine months of 2016. Before the sales deal, it was in the process of going public.
However, on Tuesday, Cisco announced that the two companies reached a sales agreement. Cisco Systems will be acquiring the software company.
Cisco, Systems Inc. is a technology conglomerate. The multinational was founded in 1984. It is headquartered in San Jose, California. Cisco sells, develops, and manufactures high-technology products and services. These include telecommunications equipment and networking hardware.
Cisco is also specialized in specifically targeted tech markets. It activates in domain security, energy management, and IoT. These specializations are helped along by their subsidiaries. Cisco is considered one of the world’s largest networking companies.
Now, the conglomerate is reportedly looking to grow beyond the networking business. Their AppDynamics deal will be one of the largest acquisitions. At least over the past several years.
Rob Salvagno, Cisco’s VP of Corporate Development went to offer some details. According to him, the company has been following AppDynamics. Cisco has been interested in the company for some time. And their IPO process offered Cisco quite a chance.
AppDynamics was in the process of going public. It would have been the first tech company to do so this year. Banking analysts had already estimated its value. AppDynamics could have went as high as around $2 billion.
The company was expected to sell off its shares. And their valuation was expected at approximately $1.9 billion. AppDynamics’s per share value would have been at around $10 to $12.
Its acquisition will nonetheless raise its share value. Cisco has agreed to a $3.7 billion sales value. As such, AppDynamics shares will be at around $26 per share. The acquisition deal will be an equity awards and cash mix.
According to Cisco, it is expected to close sometimes in the company’s third fiscal quarter. The sales deal was officially announced in a Cisco press release. This was posted on the official company blog post.
Some additional details were offered. For example, AppDynamics will be part of Cisco’s new software business unit. This latter will be led by Rowan Trollope. He is the general manager and senior VP of the IoT and Applications business.
The AppDynamics acquisition should help and advance Cisco’s new strategy. They are looking to transitions towards a new area. More exactly, that of software-centric solutions. This domain should come with a predictable recurring revenue.
Cisco reportedly based its decision on the ever-growing digital infrastructure dependence. Companies are transitioning to cloud services. And are also getting digitized. But this also leads to large amounts of siloed, complex data. The AppDynamics system should help translate and manage such data. It will contribute to its translation into business insights.
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