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Cisco plugs in Lightwire for $271M

by Demitri Diakantonis  |  Published February 24, 2012 at 3:28 PM ET
Cisco_227x128.jpgCisco Systems Inc. announced Friday, Feb. 24, that it has agreed to acquire venture capital-backed cloud services provider Lightwire Inc. for $271 million in cash.

Cisco said it will fund the acquisition through cash and retention-based incentives.

Allentown, Pa.-based Lightwire makes high-speed optical transreceivers for network vendors. Its products do not consume as much power because they are made smaller. As a result, they come at lower average costs to its customers.

The transaction adds to Cisco's core optical networking division.

"The acquisition of Lightwire will support our data center and service provider customers as they manage the continuing deluge of network traffic alongside tight capital and operating budgets," said Surya Panditi, senior vice president of Cisco's networking group, in a statement.

Lightwire is backed by New Science Ventures, Artiman Ventures and Novitas Capital. New Science led the target's latest round of funding, in March 2011, valued at $14 million. Lightwire was founded in 2002 by former AT&T Inc. executive Kal Shastri.

Cisco said Lightwire will complement its $99 million acquisition of optical networking chipmaker CoreOptics Inc. in 2010.

After the deal closes, expected in the third quarter, Lightwire will be added to Cisco's transceiver modules group business unit and supply chain operations group. The target's employees are expected to join Cisco.

San Jose, Calif.-based Cisco is a historically active acquirer. The company recently indicated that it will remain on the hunt for deals, despite losing one of its top M&A executives in Charles Carmel last year. Carmel left Cisco to join New York private equity firm Warburg Pincus as a managing director.

Cisco announced six acquisitions in 2011, compared with five in 2010 and seven in 2009. Its acquisitions last year include its $99 million purchase of software developer BNI Video in October and its acquisition of software startup company TaskDock Inc., which does business as Versly, for undisclosed terms in August.

Demand for cloud technology companies remains strong. On Feb. 9, Oracle Corp. paid $46 per share, or $1.9 billion, for Dublin, Calif.-based Taleo Corp.; and on Jan. 16, Symantec Corp. acquired LiveOffice LLC of Torrance, Calif., for $115 million. On Jan. 9, LogMeIn Inc. acquired Woburn, Mass.-based Bold Software LLC for $16.5 million in cash.

Cisco shares were trading evenly at $20.24 Friday afternoon, with its market capitalization near $109 billion.

Cisco and Lightwire did not return calls