The continued video-based evolution of Cisco took a major leap forward this morning with the news that it will buy digital TV software and security vendor NDS for $5 billion.

The deal is valued at about $4 billon, and Cisco will take on $1 billion of NDS’ debt. News Corp. and private-equity firm Permira jointly own NDS, which is based in the United Kingdom. News Corp. owns 49 percent of NDS, while Permira has the remaining 51 percent stake.

NDS went private in 2009. Prior to today’s acquisition, NDS was rumored to be taking the company public again this year, according to published reports.

Last year, Cisco Chairman and CEO John Chambers vowed to remake the company, which included the layoff of about 10,000 employees. In Cisco’s latest earnings call, Chambers said Cisco would once again become more aggressive on the acquisition front. Today’s deal to buy NDS was Cisco’s biggest since it bought Scientific Atlanta in 2005 for $6.9 billion.

“Our strategy has always been driven by customer need and on capturing market transitions,” Chambers said. “Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation.”

Both boards have signed off on the deal, which is expected to close during the second half of this year. NDS’ 5,000 employees will join the Cisco Service Provider Video Technology Group (SPVTG), led by senior vice president and general manager Jesper Andersen.

"Cisco and NDS are helping drive the transition that will enable service providers and media companies to offer new revenue-generating video experiences,” said Abe Peled, executive chairman of NDS. “NDS’ open software video platform and services are highly complementary to Cisco technology, and together we are uniquely positioned to enable service providers to deliver fresh and exciting multi-screen video services to their customers.

“A key component of NDS’ success has been our open software and services model, working with a wide range of set-top box manufacturers to enable greater choice for our customers; following this acquisition, this strategy will continue and expand the choice of hardware solutions available to service providers worldwide.”

Once the deal closes, Peled will be named senior vice president and chief strategist for Cisco’s Video & Collaboration Group. He will report directly to Marthin De Beer, senior vice president of the Cisco group.

NDS brings a range of global customers, including BSkyB, Liberty Global and Canal Plus, into Cisco’s stable, as well as NDS’ VideoGuard conditional access and digital rights management technology, which NDS said has been deployed in 125 million pay-TV households, protecting more than $50 billion in revenues.

VideoGuard provides service and content protection across a range of platforms and devices. Video providers are using it to enable their TV Everywhere services across home networks; over-the-top services; and PC, Mac, iOS and Android-based mobile and tablet devices.

In today’s press release, Cisco said the addition of NDS’ software solutions would accelerate the deployment of its Videoscape platform.

There’s some overlap between Cisco’s conditional access and DVR technologies and what NDS has to offer, but Cablevision is using NDS' Open Media Security (OMS) security system, and other cable operators in North America are reportedly interested in it, as well.

Cox Communications worked with NDS for the user interface on its Trio guide, as well as on its recent launch of streaming live TV to iPads.

Through its Professional Services Group, NDS, which has an office in Atlanta, has also worked closely with Cox and Comcast on tru2way implementations.

Two years ago, Cox and NDS announced they had extended their professional services and integration agreement through this year.

NDS is also providing the middleware on Liberty Global’s next-generation Horizon video gateway. Liberty subsidiary UPC is slated to start deploying the Horizon gateway in various European countries this year.

Late last year, NDS said it was the top digital pay-TV vendor in India, with its products in 20 million homes.

In July, NDS announced that Dave Habiger was the company’s new CEO, while former CEO and Chairman Abe Peled assumed the full-time position of executive chairman for the company.