Cybersecurity has grown into a huge business for tech companies and the deal puts Cisco, known mostly for routers and network equipment, on par with rivals Palo Alto Networks, Check Point, CrowdStrike and Microsoft, analysts said.

Based in San Francisco, Splunk is a software platform that uses artificial intelligence to help users dig through data in real time to identify malware and cyber threats.

"Our combined capabilities will drive the next generation of AI-enabled security and observability," said Cisco CEO Chuck Robbins.

Under the terms of the deal, Cisco will pay a big premium of $157 per share, up from the roughly $120 Splunk traded at before the announcement and far above the 52-week low of $65.

According to its website, Splunk was founded in 2003 and holds over 1,100 patents. The Nasdaq-listed company employs over 7,500 people worldwide.

The acquisition "aligns with Cisco's M&A strategy to bolster their cybersecurity offering," analyst Joseph Brunetto at Third Bridge said in an email.

"Outside of Splunk, Cisco has acquired four companies this year alone... all increasing Cisco's footprint in threat detection, identity management and cloud security," Brunetto added.

The companies expect the deal to close in less than 12 months, after the required regulatory approval from antitrust authorities.