BY Richard Summerfield
Cisco Systems Inc. has announced that it is to acquire software startup AppDynamics in a deal worth $3.7bn.
The deal, which is expected to close before April, came on the eve of AppDynamics’ planned public offering. The IPO, due to be launched on Wednesday, would have been the first major tech offering of 2017. AppDynamics had intended to launch its IPO in December 2016; however the company decided to delay its offering due to uncertainty over the US presidential election.
The $3.7bn price dwarfs the $1.72bn market value that AppDynamics was seeking via IPO. Cisco agreed to pay around $26 a share, well above the company’s original price range of $10 to $12 a share.
Cisco, which has been synonymous with computer networks and hardware, has become increasingly focused on software under the leadership of CEO Chuck Robbins. The company is pivoting toward new business lines, including the Internet of Things, and has begun to make acquisitions in the space. In 2016 Cisco acquired Internet of Things platform maker Jasper Technologies for $1.4bn.
“Applications have become the lifeblood of a company's success. 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," said Rowan Trollope, Cisco senior vice president and general manager of Cisco's Internet of Things and Applications Business Group. "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, and help IT to drive a new level of business results."
AppDynamics, founded in 2008, will continue to be led by the company’s chief executive and president David Wadhwani. "AppDynamics is empowering companies to build and successfully run the applications they need to compete in today's digital world," said Mr Wadhwani. "With digital transformation, companies must re-define their relationships with customers through software. We're excited to join Cisco, as it will enable us to help more companies around the globe."