LONDON (05/05/2000) - Cisco Systems Inc. has entered into a definitive agreement to acquire ArrowPoint Communications Inc., a supplier of switches that can speed up the delivery of Web content, in an all-stock deal valued at US$5.7 billion, the networking giant announced today.
Under the terms of the agreement, which has been approved by the boards of director of both companies, Cisco will exchange 2.1218 shares of Cisco common stock for every outstanding share and option of Acton, Massachusetts-based ArrowPoint.
ArrowPoint, which recently held its initial public offering (IPO), has customers ranging from Excite@Home Inc. to Exodus Communications Inc.
"This market is very exciting for both us and our customers," Larry Carter, chief financial officer for Cisco, said. "We had been discussing the merger, and it made sense for us to push this discussion forward to post-IPO."
"We think the market opportunity justifies us striking this agreement at this time," Carter added.
The $5.7 billion value of the transaction is based on the $63.63 closing price of Cisco's shares yesterday.
Cisco said the deal still is subject to certain closing conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act and by ArrowPoint's shareholders.
The acquisition is expected to close in the fourth quarter of Cisco's fiscal 2000.
ArrowPoint's products, in combination with Cisco's Internet infrastructure offerings, will be aimed at ISPs (Internet service providers), Web hosting companies and others to improve the user experience of surfing the Web, the company said. Cisco added that ArrowPoint's software features also can be integrated to its existing products.
ArrowPoint brings to Cisco a set of content-aware technology such as URL- (Uniform Resource Locator) and cookie-based switching, which allow traffic to be directed based on data such as requested URLs and frequency of the content request, according to a Cisco statement.
"Cisco's products complement what we have to optimize our load distribution," said Cheng Wu, chief executive officer of ArrowPoint.
In addition, Cisco also hopes that ArrowPoint's products will help to strengthen the company's reach into markets, ranging from ASPs (application service providers) and AIPs (application infrastructure providers) to dot-com companies.
"By acquiring ArrowPoint, we are getting some of the most senior talent in the field," of content-based switching, said Kevin Kennedy, senior vice president, service provider line of business, specifically mentioning Wu.
ArrowPoint, founded in 1997, has 337 employees, all of whom, including Wu, will join Cisco.
Cisco Systems, in San Jose, California, can be reached at +1-408-526-4000, or via the Web at http://www.cisco.com. ArrowPoint Communications, in Acton, Massachusetts, is at http://www.arrowpoint.com/.