What happened
Shares of Fastly (FSLY 3.90%) jumped 15% on Tuesday as acquisition rumors intensified.
So what
Chatter is swirling that Cisco Systems (CSCO 2.73%) is interested in beefing up its edge-computing capabilities. To do so, the tech heavyweight reportedly is considering an acquisition of Fastly.
Fastly's stock popped on Tuesday as investors grew excited about the possibility of a merger with Cisco. Image source: Getty Images.
Piper Sandler analyst James Fish said a deal would allow Cisco to pair its cybersecurity tools with Fastly's edge network, thereby boosting the value proposition to its customers. However, he cautioned that Cisco has signaled that it's not currently on the hunt for acquisitions. Fish also posited that Akamai Technologies (AKAM 2.53%) could make for a better fit, as Cisco already does business with the content delivery company.
Now what
Speculating on a takeover is a risky endeavor. Fastly's stock price could surge further if Cisco makes a bid, as it would likely need to include a hefty premium to entice the edge computing company's shareholders to accept its offer. However, if a deal doesn't materialize, Fastly's shares could plunge back to the prices at which they were trading prior to the emergence of acquisition rumors.
