Cisco buys Israeli IP company for $US118 million

Cisco Systems yesterday announced plans to acquire a privately held Israeli company whose technology fits into Cisco's strategy to deliver end-to-end, IP-based solutions for service providers that are deploying advanced data, voice and video services.

Cisco is buying Pentacom Israel in a move aimed at expanding its product portfolio to help service providers build more flexible and more manageable networks based on IP (Internet Protocol), Cisco said in a press release.

Pentacom provides products that implement the Spatial Reuse Protocol, which allows IP-based metropolitan networks to offer the same protection and restoration benefits as networks based on SONET (Synchronous Optical Network) while doubling bandwidth efficiency, the release said.

The acquisition fits into Cisco's New World strategy to deliver end-to-end, IP-based services for service providers. Pentacom's technology provides fiber management and hubbing for IP transport networks, according to Cisco.

Under the deal, Cisco common stock worth about $US118 million will be exchanged for all outstanding shares and options of Pentacom. Cisco expects a one-time write-off of up to 1 cent per share for purchased in-process research and development expenses.

The acquisition has been approved by the board of directors of each company and is expected to close in the fourth quarter of Cisco's fiscal year 2000. Cisco made an 11 percent investment in Pentacom in June 1999. Pentacom will join the Public Carrier IP Systems Group within Cisco's Service Provider line of business.

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