Cisco has sealed a pivotal $2.9 billion acquisition of wireless networking firm Starent, less than two weeks after it bid $3 billion for videoconferencing group Tandberg.
Both takeover deals, against the backdrop of a tentatively recuperating global economy, have led to the city pour more investment in Cisco. The firm’s FTSE share price hit a 13-month high yesterday.
Cisco will buy Starent as part of its ongoing plans to expand its high-speed wireless business. The deal goes hand-in-hand with the proposed Tandberg buyout; a company which has since lived on high-speed internet.
Massachusetts-based Starent builds network technologies that work between radio access network and the core network of mobile phone service providers.
Cisco, being a company embedded in telecommunications, did admit that some overlap would occur between its current offering and what Starent adds to it.
"We are very pleased that Starent Networks will be joining the Cisco team, and we believe their products and engineering talent will greatly benefit our Service Provider customers as they build out their Mobile Internet offerings," said Cisco CEO John Chambers.
Starent will soon be part of Cisco's service provider business, but formed as a new Mobile Internet Technology Group.
The city is witnessing Cisco spend outrageous amounts of cash. The Starent buyout is put at a 20 per cent premium to the firm’s stock as of Monday, while the Tandberg deal is at a 11 per cent premium.
However, Cisco admitted the deal would likely hurt earnings in its 2010 and 2011 fiscal reports, but yield profit in 2012.
Cisco awaits regulatory approval for the deals.
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