Cisco Systems has announced that it will buy cloud computing company Meraki for $1.2bn (£750m), in a deal which will see Cisco Systems expand its ability to let customers compute in the cloud. Meraki offer services that help firms to manage their networks using the internet.
With the Cisco-Meraki acquisition, Cisco can offer more software-centric solutions to simplify their network management issues. The deal will enhance Cisco’s “Unified Access” platform which makes IT more responsive to business innovation by simplifying IT operations.
Cisco Systems will pay retention-based incentives to takeover Meraki. The Cisco-Meraki deal is expected to be sealed in the second quarter of Cisco’s fiscal 2013, depending upon customary closing conditions including regulatory approval.
Since past week, Cisco Systems has been on an acquisition-spree, as this the second purchase that the networking equipment maker has announced in the past few days. Last week, Cisco Systems signed a $125m deal to acquire Cloupia, a firm that specialises in data centre management.
Meraki will form Cisco’s new Cloud Networking group, led by Meraki CEO Sanjit Biswas. The company said on its website it had originally planned to remain independent and go public, but joining Cisco will help it achieve its goal of hitting $1 billion in revenue a year.
Meraki CEO Sanjit Biswas said that Cisco had approached Meraki with the offer several weeks ago with the pitch of extending the company’s reach with worldwide distribution through Cisco’s sales apparatus. Cisco was attracted by Meraki’s technology and financials, he said.
The deal comes as the computer-networking industry is undergoing a shift toward software which eliminates the need for some expensive types of equipment and gives administrators more control over their networks.
Cisco shares shot up after the latest quarterly results were announced. It remains to be seen how investors react to this acquisition.