According to unconfirmed reports, CSCO is expected to receive approval for its merger tomorrow. This is tentative because the EU is extraordinarily tough on merger scrutiny, blocking for example the ADBE acquisition of Figma.
Notable because the cybersecurity company SPLK was purchased in September at the depressed fire sale prices at the time: $28b
https://www.cnbc.com/2023/09/21/cisco-acquiring-splunk-for-157-a-share-in-cash.html
As a comparison point, in September the cybersecurity company CRWD had approximately the same market cap and has since more than doubled adding $40b of market cap.
Like CRWD, SPLK delivered a huge earnings beat at its last earnings
So a rough calculation estimates the windfall of this transaction at $40b for CSCO — a 20% upside at its current market cap of $200b.
Realistically, spinoffs maximize value so adding market caps is an overestimate, nevertheless, if the rumors are correct and it receives unconditional approval it seems that CSCO is undervalued at its current P/E of 15.
Also note that while the first article says the review ends tomorrow, it doesn’t explicitly say the decision is made public tomorrow.
