Cisco signs 2 big deals in two weeks, leads tech M&A charge
New York: Cisco Systems, a maker of corporate networking gear, has habit of buying dozens of companies every year. After coming out of the recession phase, Cisco has led the tech industry's charge in mergers and acquisitions, and announced the acquisition of wireless equipment maker Starent Networks for $2.9 billion and Norwegian video conferencing maker Tandberg for $3 billion.
When it comes to Cisco Systems and dealmaking, the prevailing sentiment in Silicon Valley is: You can't predict what Cisco will buy next, but you can see why it fits. Cisco is known for its voracious dealmaking appetite, buying dozens of companies every year and digesting them quickly and efficiently to broaden its already wide-ranging business.
Analysts expect that the San Jose, California-based company, which ended the last quarter with a cash balance of $34 billion, to keep up the dealmaking pace, especially now that some stability has returned to financial markets. "The ability to expand in markets where we have been strong clearly has been a big part of what we've done in the past," said Hilton Romanski, Vice President of Corporate Development, Cisco.
"But the other major element is new market entry," said Romanski, a former JPMorgan banker who joined Cisco in 2000 and runs its global acquisition and venture investment strategy.
According to Thomson Reuters' data, Cisco, which was founded in 1984, has spent about $56 billion on 174 deals so far. Along with its in-house team, Cisco occasionally uses a range of outside financial advisers, from Barclays to Lazard. Many of the acquisitions were start-ups or private companies with assets that bolster Cisco's core business of making switches and routers that direct computer traffic.
Cisco has traditionally eschewed hostile approaches or big deals, but bankers say that could change as the rivalry with other tech behemoths like International Business Machines and Hewlett-Packard heats up.
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