Cisco To Buy Cloud-Networking Firm Meraki For $1.2 Billion

Cisco Systems Inc. (Nasdaq: CSCO) announced Sunday it plans to acquire the privately held cloud-networking company Meraki Inc. for about $1.2 billion in cash and retention-based incentives.

Cisco, based in San Jose, Calif., said in a statement that Meraki, headquartered in San Francisco, offers midmarket business customers easy-to-deploy, on-premise, networking solutions that can be centrally managed from the so-called cloud.

The acquisition would complement Cisco’s strategy to provide more software-centric solutions to simplify network management, help customers empower mobile workforces, and generate new revenue opportunities for partners, the world’s largest manufacturer of computer-networking equipment said.

The purchase would also strengthen Cisco’s Unified Access platform, which makes the information-technology function more responsive to business innovation by simplifying IT operations and uniting wired and wireless networks, and their management, into one integrated network infrastructure, unlike other competitive offerings, the company said.

“The acquisition of Meraki enables Cisco to make simple, secure, cloud-managed networks available to our global customer base of midsize businesses and enterprises. These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions,” said Rob Soderbery, senior vice president of the Cisco Enterprise Networking Group. “Meraki’s solution was built from the ground up optimized for cloud, with tremendous scale, and is already in use by thousands of customers to manage hundreds of thousands of devices.”

Meraki technology makes available to customers Wi-Fi, switching, security, and mobile-device management centrally managed from the cloud, Cisco said.

“The [$1.2 billion] valuation reflects that Wi-Fi, as a market, has very compelling growth prospects ahead,” said Erik Suppiger, an analyst at JMP Securities LLC in San Francisco who was quoted by Bloomberg News.

Cisco anticipates the purchase would close in the second quarter of its 2013 fiscal year, subject to customary closing conditions, including regulatory review.

A conference call to discuss the proposed transaction on Monday between 6 and 6:45 a.m. PST (between 9 and 9:45 a.m. EST) will be co-hosted by Soderbery, Hilton Romanski, Cisco's vice president of business development, and Sanjit Biswas, Meraki's CEO and co-founder.