tech2 News StaffJan 25, 2017 09:57:34 IST
Cisco Systems has struck a deal to buy software company AppDynamics for $3.7 billion. The buyout happened in just the nick of time as AppDynamics was expected to sell off its shares to the public at a valuation of $1.9 billion. This is one the largest deal for Cisco in recent years as the company is looking at growing beyond its core networking business.
Founded in 2008, AppDynamics develops software to help companies monitor their mobile apps and websites for bugs and fix them before customers drop off. The company generated revenue of $158.4 million in the first nine months of 2016, up 54 percent from the prior year. It was gearing up to become the first tech company to go public this year. Just yesterday bankers had valued AppDynamics at as high as about $2 billion. However, Cisco agreed to pay about $26 a share which was well above the company’s original price range of $10 to $12 a share.
"The fact that they were in their IPO process represented a window where we needed to make a decision. From a strategic perspective, this is a company that Cisco has had its eye on for some time," said Rob Salvagno, Vice president of corporate development, Cisco.
The deal is a mix of cash and equity awards and is the largest acquisition for Cisco and expected to close in Cisco's fiscal third quarter. Its last big buyout was security company Sourcefire for $2.7 billion in back in 2013.
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