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Cisco to buy AppDynamics for $3.7 billion in growth push

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Cisco Systems Inc said on Tuesday that it agreed to buy U.S. business software company AppDynamics Inc for about $3.7 billion, making one of its largest deals of recent years as it searches for growth beyond its core networking business.

Legacy technology players like Cisco have been trying to shift their strategy to stay ahead of technology developments, such as the rise of cloud computing, that could otherwise threaten their core businesses.

Cisco’s announcement comes a week after Hewlett Packard Enterprise Co said it would buy cloud startup SimpliVity for $650 million in cash.

President Donald Trump’s plan to incentivize U.S. companies to repatriate their overseas cash could spur a new wave of dealmaking for large tech companies like Cisco, analysts say.

Rob Salvagno, Cisco’s vice president of corporate development, said in an interview that the acquisition fits Cisco’s long-term direction and its transition toward software.

AppDynamics makes software that manages and analyzes applications and it has about 2,000 paying customers, including NASDAQ Inc, Nike Inc and its new owner, Cisco.

Cisco swooped in to buy AppDynamics the day before the San Franciso-based firm was planning to price its long-planned IPO. The company has been on its road show with investors.

“The fact that they were in their IPO process represented a window where we needed to make a decision,” Cisco’s Salvagno said.

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