Cisco to buy Starent for $2.9B
Cisco has agreed to buy Starent Networks for $2.9 billion in a deal that will boost the company’s mobile Internet offerings.
Starent Networks’ infrastructure equipment allows operators to bind their wireless networks to the Internet, which in turn helps operators support smartphones operating on their networks.
Cisco is in the midst of another of its occasional buying sprees; earlier this month, Cisco laid out $3 billion to acquire Tandberg’s videoconferencing operation .
Cisco will pay $35 per share in cash in exchange for each share of Starent Networks. The acquisition has been approved by the boards of both companies and is expected to close during the first half of 2010 pending regulatory approval.
The purchase is at least two years ahead of the market; Cisco said Starent will probably be a drag on earnings through 2011, and may not start contributing profits until 2012.
Starent Networks will form a new mobile Internet group within Cisco’s service provider business, which is currently headed by Pankaj Patel. Starent’s current president and CEO, Ashraf Dahod, will lead the mobile Internet group.
In a statement, Cisco’s Patel said the two companies “share a common vision and bring complementary technologies designed to accelerate the transition to the mobile Internet, where the network is the platform for service providers to launch, deliver and monetize the next generation of mobile multimedia applications and services.”
Tewksbury, Mass.-based Starent was founded in 2000 and completed its initial public offering in 2007. The company has about 1,000 employees worldwide and had $254 million in sales during 2008.
Starent provides the multimedia intelligence, core network functions and services to manage access from any 2.5G, 3G and 4G radio network to a mobile operator's packet core network. Starent Networks’ access-independent technology is deployed in CDMA2000 (1X, EVDO), UMTS/HSPA and WiMAX networks.
– CED’s Brian Santo contributed to this report