Bangalore, October 14: Cisco Systems has announced its multi-billion dollar acquisition for wireless networking gear maker Starent Networks with a $2.9 billion bid. Cisco said that it would pay $35 a share in cash for Starent since it bets on a sharp increase in data traffic, including video, on high speed wireless networks.
The deal represents about a 20 percent premium over Starent’s closing price on Monday of $29.03 per share. According to the company, the Starent’s board has accepted the offer, and the deal is expected to close early next year. Starent, based in Tewksbury, Massachusetts was started in 2000 and has traded publicly since 2007. Last year, the company reported about 74 percent rise in revenue to $254.1 million.
With the acquisition, Cisco is betting that consumers will keep pulling down ever larger amounts of data onto smartphones and laptops via wireless networks. “We have had a huge explosion in data traffic,” said Ned Hooper, Cisco’s Chief Strategy Officer. “We expect the market for mobile data to double every year through 2013.”
Cisco has forecast that by 2013 about 60 percent of the data traveling across mobile networks will come from videos. The move for Starent follows the company’s announcement that it plans to buy video conferencing equipment maker Tandberg for $3 billion. Cisco is coming out of the recession with the largest cash balance of any technology company, at $35 billion at the end of July. In March, Cisco paid $590 million for Pure Digital, a video camera maker.
—Agencies