The first tech IPO of 2017 is canceled: Cisco is buying AppDynamics for $3.7 billion

AppDynamics, which would have carried out the first big tech initial public offering of 2017, is getting bought by the networking titan Cisco for $3.7 billion in cash and equity awards, Cisco announced on Tuesday afternoon.

The surprise deal, on the eve of a hotly anticipated stock offering, is likely to raise more uncertainty about Wall Street’s appetite for richly valued tech companies.

The San Francisco startup’s now-scuppered IPO was on track to value the company at a maximum of $1.7 billion — less than its most recent private valuation of $1.9 billion.

The new news site Axios reports that AppDynamics would have been worth $2.2 billion fully diluted, though, which would have nudged it above that valuation. That report also indicates that the deal came together at the last second, with AppDynamics executives meeting with potential IPO investors as late as noon on Tuesday.

The acquisition by Cisco provides a much better exit for AppDynamics’ investors. Cisco is paying a considerable premium for the company, which makes products that help companies monitor and analyze their software. According to a blog entry, AppDynamics CEO David Wadhwani will be staying on to run the company as a new business unit at Cisco under the umbrella of its “Internet of Things” business for smart connected devices.

Interestingly, AppDynamics had just updated its S-1 filing to go public on Tuesday morning, raising the range of its IPO up to $12 to $14 from $10 to $12. In either case, it would have been below that $1.9 billion valuation.

This was a closely watched IPO after the relative lack of newly public tech company offerings in 2016. Now, though, the race is on: In a year in which Spotify, Dropbox, and Snapchat parent Snap are all expected to go public, who will be the first IPO of 2017?

– Matt Weinberger, Business Insider

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