Cisco to buy home networker Linksys for $500 million
SAN JOSE, Calif. Broadband connectivity company Cisco Systems Inc. said today (March 20) that it has reached an agreement to acquire the business of privately held The Linksys Group Inc. of Irvine, Calif., a provider of wired and wireless home networking products.
The acquisition represents Cisco's entry into the consumer and home-office networking market, the company said, although its products are already used in home offices.
Cisco plans to issue common stock worth about $500 million to acquire the Linksys business and to assume all outstanding employee stock options, with the acquisition closing in the fourth quarter of Cisco's fiscal year 2003, which ends in July 2003.
Linksys was founded in 1988 and has 308 employees. Linksys, led by Victor Tsao, chief executive officer, would operate as a division of Cisco reporting to Charlie Giancarlo, senior vice president and general manager of product development, Cisco said.
The acquisition has already been approved by the board of directors of each company but is subject to various closing conditions, Cisco added.
"Fueled by consumer broadband adoption, the home networking space has experienced mass market acceptance. Linksys has captured a strong position in this growing market by developing an extensive, easy-to-use product line for the home and small office," said John Chambers, president and chief executive officer of Cisco Systems, in a statement.
Linksys has more than 70 products in the market including wireless routers, wireless network adapters and wireless print servers as well as traditional wired products such as Ethernet routers and attached storage digital music, photo and video media files.
Upon closing of the acquisition, Linksys' business is to be operated as a division of Cisco, with Linksys becoming a Cisco product brand name.