Thread by @JonahLupton

Apparently they are rumors starting to circulate that $CSCO is looking at $FSLY as a possible acquisition target. This deal would make a ton of sense for $CSCO and allow $FSLY to keep working with their big cloud hosting/infrastructure partners like AWS, Azure and GCP.

As a $FSLY shareholder I have mixed feelings because I think this could be a $250+ stock in 2-3 years.

$CSCO would need to pay at least $15B for $FSLY which puts the price tag at approx $130/share.

Not sure $CSCO is willing to pay 30x 2021 sales but we might find out soon.

As of the end of Q3 $CSCO had $30 billion of cash on their balance sheet and their market cap currently stands at $187 billion so doing this deal would be easy. My guess is a 60% cash and 40% stock deal makes the most sense.

Sometimes management or someone on the deal team will leak these rumors to see how the stocks react and given that $CSCO is up on this rumor... it might give $CSCO management even more confidence to pull the trigger.

I think $CSCO has lost some luster in recent years and missed some pretty big trends/shifts in the digital economy so they better start doing M&A if they want to get investors excited about the future — they have the market cap + cash to buy almost any company they want.

This is getting interesting 🙂

Looks like the hedge funds have now joined the party 👀

If this was middle of the week I’m not sure we’d see $FSLY up 15-16% but the fact it’s a Friday and there’s always a chance the deal gets leaked or announced over the weekend or Monday morning it why the big funds are piling in.

Since I’ve gotten 10+ DM’s asking if this deal (still a rumor) would look like the $TDOC & $LVGO deal — short answer is NO

$CSCO is a $185B company with $30B of cash. This deal would be all cash or mostly cash but it’s a true acquisition. $TDOC & $LVGO was basically a merger.