Cisco has announced plans to acquire AppDynamics just a day before the latter’s intended IPO. Cisco will acquire AppDynamics for $3.7 billion in cash and equity in a deal that signals its interest in transitioning from a hardware and networking company to a software company with investments in cloud technologies. AppDynamics, which specializes in application performance monitoring, competes with the likes of New Relic and Datadog. Given that AppDynamics was valued at $1.9 billion, its acquisition for $3.7 billion underscores its perceived market value for Cisco as the networking hardware giant transforms its business model to recognize the criticality of application and infrastructure monitoring, management and optimization to contemporary enterprise IT. The deal proleptically illustrates the beginning of a tidal wave of tech mergers and acquisitions as tech behemoths attempt to reinvent themselves by acquiring promising startups as evinced by HPE’s recent acquisition of CloudCruiser to help understand IT infrastructure consumption and usage. Cisco’s acquisition of AppDynamics means that 2017’s first tech IPO has fallen by the wayside even as the year awaits a number of promising IPOs that could include the likes of Dropbox, Spotify, Airbnb and AppNexus.
On Friday December 12, Hortonworks finished its first day of trading with a share price of $26.48, roughly 65% more than the IPO price of $16 per share. Hortonworks plans to raise $100M by means of 6,250,000 publicly available shares. Friday’s impressive showing bodes well for the Hadoop infrastructure and analytics market in 2015, particularly given that Hortonworks competitors are gearing up to execute IPOs in 2015 or shortly thereafter. Cloud monitoring and analytics vendor New Relic similarly gained in its first day of trading by rising 48% from $23 per share to $33.02 by the end of the day. The results represented a huge coup for venture capitalist Peter Fenton of Benchmark Capital, who serves on the board of directors of both companies. Whereas Hortonworks raised $100M in its IPO, New Relic raised $115M. The real winner in both of these IPOs, however, is Yahoo given that Yahoo owns roughly 20% of the shares of its spin-off Hortonworks and 16.8% of shares of New Relic.