Cisco agrees to pay $3.7B for AppDynamics and its cloud applications and business monitoring platform one day before planned IPO.
Cisco Systems is set to pay $3.7 billion for privately held AppDynamics in a move to bolster its ability to offer application intelligence. The transaction was announced just a day before AppDynamics was set to launch an initial public offering.
The deal, which is set to include a combination of cash and “assumed equity awards,” will see Cisco gain control of San Francisco-based AppDynamics cloud application and business monitoring platform designed to improve application and business performance. Cisco said the move will allow it to provide customers with “intelligent and actionable insights, helping them make speedy business decisions and improve business performance.”
“Applications have become the lifeblood of a company’s success,” explained Rowan Trollope, SVP and GM of Cisco’s Internet of Things and Applications Business Group, in a statement. “Keeping those apps running and performing well has never been more important. Unfortunately, that job has only gotten harder as IT departments and developers struggle with a tangled web of disconnected, complex data that’s hard to understand. The combination of Cisco and AppDynamics will allow us to provide end-to-end visibility and intelligence from the network through to the application; which, combined with security and scale [will] help IT to drive a new level of business results.”
Cisco said AppDynamics would run as a new software business unit in its IoT and Applications business reporting to Trollope. Current AppDynamics CEO David Wadhwani is set to continue leading the business once the deal closes, which is currently set to close by April.
In addition to gaining access to AppDynamics core business, Cisco said the deal bolsters its “strategic transition toward software-centric solutions that deliver predictable recurring revenue.” AppDynamics is said to have around 2,000 paying customers
Published reports indicated Cisco paid about double what AppDynamics was looking to fetch through its pending IPO, with RBC analyst Mitch Stevens noting in a Reuters story that the Cisco price “appears to be high.”
Cisco investors appeared to be in support of the deal, with the company’s stock (CSCO) trading up slightly on the news.
The software giant late last year updated its IOS XR Cloud-Scale Networking platform for greater telecommunications operator support in central office deployments. The firm noted the expansion is designed to allow service providers and web companies to tap into software-defined networking and network functions virtualization technologies in transitioning their “central offices to next-gen data centers.” Specifically, Cisco said the platform can be used to ease creation of a unified network-as-a-fabric across central office, metro, core and data center environments.
A recent report from IHS Markit named Cisco as the top SDN vendor in the data center space, with the vendor identified as a top three vendor by 72% of respondents. The IHS Markit said the company continued to garner “traction with its SDN solutions, including with educational institutions providing online learning for students, [communication service providers] deploying self-service portals and enterprises adopting hybrid cloud architectures.”
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