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.
San Francisco-based, privately-held AppDynamics, which describes itself as a "performance management and IT operations analytics company," was a day away from pricing its long-awaited IPO—the first of 2017—which observers suggested might have gone some way to inflating its value.
"The fact that they were in their IPO process represented a window where we needed to make a decision," Cisco's corporate development vice president, Rob Salvagno, said in an interview with Reuters.
AppDynamics says it monitors the performance of its customers' business applications to try to spot flaws and performance issues before they happen.
Its chief, David Wadhwani, will continue to run the business after the proposed deal completes, Cisco said. It plans to create a new software business arm of Cisco's existing Internet of Things and apps division. 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.
Wadhwani will report directly to Cisco's IoT and apps boss Rowan Trollope, who said that applications had "become the lifeblood of a company's success." 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."
But while Cisco is eyeballing growth opportunities today, it comes at a price: last August it announced 5,500 layoffs worldwide, or around seven percent of its workforce.
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