Cisco Systems is set to acquire cybersecurity firm Splunk for approximately $28 billion, marking its largest-ever deal. This move aims to bolster Cisco's software business and tap into the growing artificial intelligence market. By merging with Splunk, known for data observability and cybersecurity monitoring, Cisco seeks to reduce its reliance on networking hardware, which has faced challenges in recent years. Splunk operates on a subscription-based model and boasts clients like Coca-Cola, Intel, and Porsche. Cisco has pulled off sizable acquisitions in the past, in 2012, Cisco bought TV software company NDS for $5 billion, while in 2017 it bought business software firm AppDynamics Inc for about $3.7 billion. Despite some concerns about regulatory scrutiny due to security business overlap, both companies expect the deal to close by Q3 2024, adding $4 billion in annual recurring revenue. If canceled, Cisco will pay Splunk a termination fee of $1.48 billion.