Gear manufacturing company Cisco is about to close a deal to acquire the U.S. telecommunications software firm BroadSoft. The deal is set to close at $1.9 billion.
With this acquisition Cisco would get an opportunity to diversify from its business of switches and routers, which seems to be slowing down.
BoardSoft has a market value of almost $1.7 billion, based on Friday’s close; it had been working with Jefferies Group to look for suitable buyers. Searchlight Capital Partners and Siris Capital Group were some of the buyout firms that had shown interest in this venture earlier.
BroadSoft, which is headquartered in Gaithersburg, Maryland, is a global communication software and service provider. The company was founded by Michael Tessler and Scott D. Hoffpauir in 1998. It operates in about 80 countries. It has sold its products to large telecommunications companies such as Verizon Communications Inc. and AT&T Inc., which then resell the software to their business customers.
Cisco is a technology conglomerate that develops, manufactures and sells networking hardware, telecommunications equipment and other high-technology services and products. The company has announced as many as eight acquisitions in 2017.
This deal is expected to close during the first quarter of 2018. Once the acquisition takes place, BroadSoft employees will join Cisco’s unified communications technology group.
This would be the second major acquisition for Cisco this year; in March of this year, the company acquired privately held AppDynamics Inc. for $3.7 billion.
According to Jason Noah Ader, an analyst at William Blair & Co., this deal will give Cisco presence in cloud-based communications products and services, a segment of the market it has been lacking in until now. BroadSoft’s business is focused on providing those services through the internet and hosting them in the cloud.
“Cisco has been a little bit behind the curve there,” Ader said. Buying BroadSoft “allows them to be a leader in the cloud instead of a challenger.”