Cisco to buy AppDynamics for $3.7B, derailing first tech IPO of 2017

San Francisco-based startup AppDynamics was set to be 2017’s first tech IPO, planning to make its public debut on Thursday.

But on Tuesday the company had a sudden change of heart.

Now instead of braving the public market, AppDynamics will sell to Cisco for about $3.7 billion, according to a news release sent out Tuesday.

“We’re excited to join Cisco, as it will enable us to help more companies around the globe,” AppDynamics President and CEO David Wadhwani wrote.

The startup makes software that lets companies track the performance of their apps — technology Cisco says will be vital to its customers.

“Applications have become the lifeblood of a company’s success. Keeping those apps running and performing well has never been more important. Unfortunately, that job has only gotten harder, as IT departments and developers struggle with a tangled web of disconnected, complex data that’s hard to understand,” wrote Rowan Trollope, Cisco senior vice president and general manager of Cisco’s Internet of Things and Applications Business Group. “The combination of Cisco and AppDynamics will allow us to provide end to end visibility and intelligence from the network through to the application; which, combined with security and scale, and help IT to drive a new level of business results.”

It appears AppDynamics was planning for its initial public offering up until the very end — just hours before the acquisition news broke, the startup raised the price range for its IPO. AppDynamics had planned to raise $156 million by offering 12 million shares at $12 to $14 per share, according to Renaissance Capital, which manages IPO-focused exchange trade funds.

That means the startup could have been worth about $1.7 billion as a public company — a discount from its last private valuation of $1.9 billion, according to the San Francisco Business Times.

While startups never like being forced to slash their valuation like that, it’s not uncommon these days in a market that is tightening up after a period of freewheeling spending. But it appears AppDynamics found a better deal and ran with it.

That means the honor of being the year’s first tech IPO is still up for grabs.

Photo: This Wednesday, May 9, 2012, file photo, shows an exterior view of Cisco Systems headquarters in Santa Clara, Calif. (Paul Sakuma/AP)


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