Networking giant, Cisco, has struck a deal to acquire application intelligence software company, AppDynamics for $US3.7 billion ($AU4.9 billion) in cash and equity.
The acquisition, which is set to close some time in Cisco's third quarter of the 2017 fiscal year, is aimed at tapping into AppDynamics's cloud application and business monitoring platform in a bid to boost visibility for its customers across the technology stack.
The deal comes just weeks after AppDynamics filed for an initial public offering (IPO) following months of industry speculation that it would make a move to go public.
Now, with AppDynamics set to be snapped up by Cisco, the application performance management software startup will operate as a new software business unit in Cisco's IoT and applications business, reporting to the division’s senior vice president and general manager, Rowan Trollope. It will continue to be led by existing CEO, David Wadhwani.
"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," Trollope said.
"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," he said.
Cisco expects the acquisition of AppDynamics will help it to provide its customers with intelligent and actionable insights with which to make speedier business decisions and improve business performance.
For Wadhwani, the multibillion-dollar purchase by Cisco will give the company a far greater global reach, albeit as a business operating under the Cisco banner.
“We're excited to join Cisco, as it will enable us to help more companies around the globe," he said.
Cisco’s head of mergers and acquisitions, and venture investment team, Rob Salvagno, suggested that AppDynamics, together with Cisco’s existing digital network architecture, will give customers “unprecedented” end to end insight across their technology stack, from infrastructure to application.
“With this insight, companies will be equipped to improve customer experiences and accelerate revenue opportunities. The acquisition of AppDynamics also supports Cisco’s strategic transition toward software-centric solutions that deliver predictable recurring revenue,” he said.
The completion of the acquisition remains subject to customary closing conditions.
The deal comes just days after Hewlett Packard Enterprise [HPE] announced it had struck a deal to acquire privately held hyper-converged infrastructure provider, SimpliVity, for $US650 million ($AU860 million) in cash.
"This transaction expands HPE's software-defined capability and fits squarely within our strategy to make hybrid IT simple for customers," HPE president and CEO, Meg Whitman, said at the time.
"More and more customers are looking for solutions that bring them secure, highly resilient, on-premises infrastructure at cloud economics. That's exactly where we're focused,” she said.