(Lfcf NTM Cy2023e)

Based on its analysis of the relevant metrics and time frame for each of the transactions listed above and upon the application of its professional judgment and experience, Morgan Stanley selected representative ranges of the price to the estimated NTM levered free cash flow multiples and the aggregate value to the estimated NTM revenue multiples of these selected technology transactions, respectively, and applied these ranges of multiples to Splunk’s estimated NTM levered free cash flow and estimated NTM revenue, respectively, based on the Research Case to calculate a range of implied equity values per share of Splunk common stock. The following table summarizes the results of Morgan Stanley’s analysis:

No company or transaction utilized in the precedent transactions analysis is identical to Splunk or the Merger. In evaluating the precedent transactions, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond Splunk’s control. These include, among other things, the impact of competition on Splunk’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Splunk and the industry, and in the financial markets in general, which could affect the public trading value of the companies and the aggregate value and fully diluted equity value of the transactions to which they are being compared. The fact that points in the range of implied present value per share of Splunk common stock derived from the valuation of precedent transactions were less than or greater than the $157.00 per share in cash to be received pursuant to the Merger Agreement by holders of shares of Splunk common stock (other than the holders of the Excluded Shares) is not necessarily dispositive in connection with Morgan Stanley’s analysis of the consideration for the Merger but is one of many factors Morgan Stanley considered.

Other Information

Morgan Stanley observed additional factors that were not considered part of Morgan Stanley’s financial analysis with respect to its opinion but were noted as reference data for the Board of Directors.

Illustrative Precedent Transaction Premiums

Morgan Stanley performed an illustrative precedent transactions premiums analysis on the Selected Technology Transactions. For these transactions, Morgan Stanley noted the distributions of the following financial statistics, where available: (i) the implied premium to the acquired company’s closing stock price on the last trading day prior to announcement (or, as applicable, on the last trading day prior to the stock price being affected by acquisition rumors or similar merger-related news); and (ii) the implied premium to the acquired company’s 30-trading day average closing stock price prior to announcement (or, as applicable, on the last trading day prior to the stock price being affected by acquisition rumors or similar merger-related news).

Based on its analysis of the premia for such transactions and based upon the application of its professional judgment and experience, Morgan Stanley selected (1) a representative range of premia and applied such range to Splunk’s closing Splunk common stock price on September 19, 2023, and (2) a representative range of premia and applied such range to Splunk’s unaffected 30-trading day average closing Splunk common stock price on September 19, 2023. The following table summarized the results of Morgan Stanley’s analysis:

Historical Trading Ranges

Morgan Stanley noted certain trading ranges with respect to the historical stock prices of Splunk common stock for the 30-day and 365-day periods ending on September 19, 2023. Morgan Stanley observed the following:

Equity Research Analysts’ Future Price Targets

Morgan Stanley noted certain future public market trading price targets for Splunk common stock prepared and published by equity research analysts and provided to Morgan Stanley by Splunk management on August 30, 2023, which excluded reports published prior to Splunk’s release of its earnings results for the second fiscal quarter of 2023 and where no future public market trading price target was indicated. These targets reflected each analyst’s estimate of the future public market trading price of Splunk common stock. The range of undiscounted analyst price targets for Splunk common stock was $105.00 to $150.00 per share. Morgan Stanley then discounted the range of analyst price targets per share for Splunk common stock by one year at a rate of 12.9 percent, which was the discount rate selected by Morgan Stanley, upon the application of its professional judgment and experience, to reflect Splunk’s cost of equity, estimated using the capital asset pricing model method and utilizing a 6 percent market risk premium, a risk-free rate of 4.3 percent based on the 10-year U.S. Treasury yield as of September 19, 2023, and a 1.43 predicted beta per Barra. This analysis indicated an implied range of fully diluted equity values for Splunk common stock of $93.00 to $133.00 per share.

The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for Splunk common stock, and these estimates are subject to uncertainties, including the future financial performance of Splunk and future financial market conditions.

General

In connection with the review of the Merger by the Board of Directors, Morgan Stanley performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at its opinion, Morgan Stanley considered the results of all of its analyses as a whole and did not attribute any particular weight to any analysis or factor it considered. Morgan Stanley believes that selecting any portion of its analyses, without considering all analyses as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis described above should not be taken to be Morgan Stanley’s view of the actual value of Splunk. In performing its analyses, Morgan Stanley made numerous assumptions with respect to industry performance, general business, regulatory, economic, market and financial conditions and other matters, many of which are beyond Splunk’s control. These include, among other things, the impact of competition on Splunk’s business and the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Splunk and the industry, and in the financial markets in general. Any estimates contained in Morgan Stanley’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates.

Morgan Stanley conducted the analyses described above solely as part of its analysis of the fairness, from a financial point of view, of the Per Share Merger Consideration to be received pursuant to the Merger Agreement by the holders of shares of Splunk common stock (other than the holders of the Excluded Shares) and in connection with the delivery of its opinion dated as of September 20, 2023, to the Board of Directors. These analyses do not purport to be appraisals or to reflect the prices at which shares of Splunk common stock might actually trade.

The Per Share Merger Consideration to be received pursuant to the Merger Agreement by the holders of shares of Splunk common stock (other than the holders of the Excluded Shares) was determined through arm’s-length negotiations between Splunk and Parent and was approved by the Board of Directors. Morgan Stanley provided advice to the Board of Directors during these negotiations but did not, however, recommend any specific consideration to Splunk or the Board of Directors, nor did Morgan Stanley opine that any specific consideration constituted the only appropriate consideration for the Merger. Morgan Stanley’s opinion did not address the relative merits of the Merger as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or are available. Morgan Stanley’s opinion was not intended to, and does not, constitute an opinion or a recommendation as to how Splunk Stockholders should vote at the Special Meeting.

Morgan Stanley’s opinion and its presentation to the Board of Directors was one of many factors taken into consideration by the Board of Directors to approve the Merger Agreement. Morgan Stanley’s opinion was approved by a committee of Morgan Stanley investment banking and other professionals in accordance with Morgan Stanley’s customary practice.

Morgan Stanley is a global financial services firm engaged in the securities, investment management and individual wealth management businesses. Its securities business is engaged in securities underwriting, trading and brokerage activities, foreign exchange, commodities and derivatives trading, prime brokerage, as well as providing investment banking, financing and financial advisory services. Morgan Stanley, its affiliates, directors and officers may at any time invest on a principal basis or manage funds that invest, hold long or short positions, finance positions, and may trade or otherwise structure and effect transactions, for their own account or the accounts of their customers, in debt or equity securities or loans of the Parent, Splunk and their respective affiliates, or any other party, or any currency or commodity, that may be involved in the Merger, or any related derivative instrument.

Under the terms of its engagement letter, Morgan Stanley provided the Board of Directors with financial advisory services and an opinion, described in this section and attached to this proxy statement as Annex C-2, in connection with the Merger, and Splunk has agreed to pay Morgan Stanley an aggregate fee of approximately $45 million, approximately $7.5 million of which was earned following delivery of the opinion described in this section and attached to this proxy statement as Annex C-2 (regardless of the conclusion reached in such opinion) and the remainder of which is contingent upon the consummation of the Merger. In addition, upon the closing of the Merger, Morgan Stanley may receive additional value resulting from adjustments to the 2027 Base Capped Call Transaction between Morgan Stanley and Splunk entered into in connection with Splunk’s issuance of 2027 Convertible Notes. Splunk has also agreed to reimburse Morgan Stanley for its reasonable and documented out-of-pocket expenses, including fees of outside counsel and other professional advisors, actually incurred in connection with its engagement. In addition, Splunk has agreed to indemnify Morgan Stanley and its affiliates, its and their respective officers, directors, employees and agents and each other person, if any, controlling Morgan Stanley or any of its affiliates against certain losses, claims, damages or liabilities and expenses related to, arising out of or in connection with Morgan Stanley’s engagement.

In the two years prior to the date of Morgan Stanley’s opinion, Morgan Stanley and its affiliates have not received any fees from Splunk in connection with financial advisory services or financing services. In the two years prior to the date of Morgan Stanley’s opinion, Morgan Stanley and its affiliates received aggregate fees of approximately less than $1 million in connection with financing services provided to Parent and majority-controlled affiliates of Parent. Morgan Stanley may also seek to provide financial advisory services and/or financing services to Splunk, Parent, and their respective affiliates in the future and would expect to receive fees for the rendering of these services.

Convertible Notes

The closing of the Merger will constitute both a “Fundamental Change” and a “Make-Whole Fundamental Change” under each of the Convertible Notes Indentures (as defined below). Under the terms of the Convertible Notes Indentures, Splunk will be required to offer to repurchase the Convertible Notes (as defined below) in connection the Fundamental Change after the closing of the Merger at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. In addition, holders of the 2025 Convertible Notes and the 2026 Convertible Notes may convert their Convertible Notes in connection with the Make-Whole Fundamental Change during a period after the closing of the Merger and receive additional make-whole consideration determined by reference to the applicable make-whole table in the applicable Convertible Note Indenture. Following the closing the Merger, the cash Per Share Merger Consideration will become the reference property into which the 2025 Convertible Notes, 2026 Convertible Notes and 2027 Convertibles Notes (collectively, the “Convertible Notes”) are convertible.

“Convertible Note Indentures” means (i) the Indenture dated as of September 21, 2018, between Splunk and U.S. Bank National Association, as trustee, with respect to Splunk’s 1.125% Convertible Senior Notes due 2025 (such convertible notes, the “2025 Convertible Notes,” and such indenture, the “2025 Convertible Notes Indenture”), (ii) the Indenture dated as of July 9, 2021, between Splunk and U.S. Bank National Association, as trustee, with respect to Splunk’s 0.75% Convertible Senior Notes due 2026 (such convertible notes, the “2026 Convertible Notes,” and such indenture, the “2026 Convertible Notes Indenture”), and (iii) the Indenture dated as of June 5, 2020, between Splunk and U.S. Bank National Association, as trustee, with respect to Splunk’s 1.125% Convertible Senior Notes due 2027 (such convertible notes, the “2027 Convertible Notes,” and such indenture, the “2027 Convertible Notes Indenture”).