Cisco to buy BroadSoft in $1.9 billion deal

Mergers and Acquisitions Reuters

(Reuters)

(Reuters) - Cisco Systems Inc (CSCO) will buy U.S. telecommunications software company BroadSoft Inc (BSFT) in a deal valued at $1.9 billion, as the world's largest networking gear producer shifts from its stagnating legacy business of switches and routers.

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Cisco said on Monday it offered $55 per share, which represents a premium of 2 percent to BroadSoft's last close.

BroadSoft shares were up 1.5 percent before the bell, while Cisco shares were up marginally.

The deal, which comes after Reuters reported on Sunday that the companies were in talks, will give Cisco a stronger foothold in selling unified communications software to big telecommunications firms.

The equity value of the deal is $1.71 billion, based on 31 million shares outstanding, according to Thomson Reuters data.

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The deal is expected to close during the first quarter of 2018, the companies said in a statement.

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Upon completion of the deal, BroadSoft employees will join Cisco's unified communications technology group.

BroadSoft provides software and services that enable mobile, fixed-line and cable service providers to offer unified communications over their internet protocol networks.

Cisco, like other legacy technology firms, has been focusing on high-growth areas such as security, the Internet of Things and cloud computing.

BroadSoft has historically sold its products to large telecommunications companies such as Verizon Communications Inc <VZ.N> and AT&T Inc <T.N>, which then resell the software to their business customers.

The BroadSoft deal is the company's second major acquisition this year following the $3.7 billion acquisition of privately-held AppDynamics Inc in March.

 

(Reporting by Munsif Vengattil and Arjun Panchadar in Bengaluru; Editing by Supriya Kurane)

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