Cisco Systems to Buy Starent Networks

Cisco Systems Inc. agreed to buy Starent Networks Corp. The deal is valued at $2.9 billion, its second multibillion- dollar acquisition in less than two weeks.

Photo: Cisco Systems to Buy Starent Networks

Cisco will pay $35 a share in cash and assume outstanding equity awards, according to a statement today. The per-share price is 21 percent more than Starent’s closing price yesterday. Cisco, based in San Jose, California, expects the transaction to add to earnings by fiscal 2012.

Starent’s equipment helps wireless carriers understand the kind of traffic that’s crossing their networks, enabling speedy routing of that information to mobile devices. The acquisition helps Cisco benefit from the increasing demand for devices such as the iPhone and BlackBerry, which boost data traffic, said Joanna Makris, an analyst at Brigantine Advisors, Bloomberg reports.

It was also reported, the deal is expected to be completed in the first half of 2010.

It is Cisco's second major acquisition this month.

On 1 October it agreed to buy the Norwegian video conferencing company Tandberg for $3bn.

At the time, Cisco chief executive John Chambers said the firm would be "more aggressive" over the next 12 months in pursuing other acquisitions, BBC News reports.

CNNMoney.com quoted John Chambers, Cisco's chief executive, as saying, "We are very pleased that Starent Networks will be joining the Cisco team. We believe their products and engineering talent will greatly benefit our service provider customers as they build out their mobile Internet offerings."

"This is a great move for Cisco," said Zeus Kerravala, analyst at Yankee Group. "When you look at the broader networking landscape, it's in wireless. Until now Cisco could talk a big wireless game, but couldn't back it up," CNNMoney.com reports.