Cisco to buy Starent for $3bn to boost its presence in the mobile web space
CISCO Systems plans to buy wireless telecommunications equipment maker Starent Networks Corp for $2.9bn (£1.83bn), betting that demand for advanced wireless equipment will grow as more consumers download videos and access the web from mobile phones.
In its second major acquisition this month, Cisco said it would pay $35 a share in cash for Starent, a nearly 21 per cent premium on Monday’s closing price. Starent shares jumped about 18 per cent in yesterday’s trading.
For Cisco, the top US network equipment maker, the deal follows the company’s 1 October announcement it plans to buy video conferencing equipment maker Tandberg for $3bn.
The Starent deal should close in the first half of 2010.
Starent makes network equipment that connects radio access networks such as 3G and 4G services with the core network of mobile phone service providers, including Sprint Nextel and Verizon Wireless, a joint venture of Verizon Communications and Vodafone.
Some of Starent’s equipment competes with Cisco products, as well as those of other networking gear companies such as Alcatel-Lucent and Huawei Technologies.
Hilton Romanski, Cisco vice president in corporate development, said that their product portfolios were “significantly complementary”.