Cisco To Buy Startup Viptela For More Than $600 Million

By Jeremy C. OwensMarketsMarketWatch Pulse

Cisco Systems Inc. announced Monday that it has reached an agreement to purchase software-defined-networking startup Viptela Inc. for $610 million in cash and assumed stock awards. Viptela's software allows for cloud-based management of networks spread over large areas or multiple sites, known as wide-area networks. Cisco has been focused on adding software offerings in order to diversify away from the networking-equipment business in which it is the biggest seller but struggling to grow revenues. "Together, Cisco and Viptela will be able to deliver next-generation SD-WAN solutions to best serve all size and scale of customer needs, while accelerating Cisco's transition to a recurring, software-based business model," Rob Salvagno, Cisco's lead executive for M&A, said in a blog post Monday. Viptela is the first acquisition Cisco has announced since a $3.7 billion deal for AppDynamics in January that kept that startup from going public at a valuation of roughly half the price tag Cisco paid. Cisco seemingly got more of a deal on Viptela: The company was reportedly valued at $875 million in a funding round just a year ago, part of $110 million Viptela has raised from private investors. Cisco shares were quiet in late trading after the announcement Monday, but are up 12.4% so far this year, easily outpacing the 6.5% increase for the S&P 500 index.

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