Cisco to buy Gaithersburg's BroadSoft for $1.9B

In May Cisco agreed to buy software-based networking start-up Viptela Inc. for $610 million

Cisco Systems, the world's largest networking gear manufacturer, is nearing a deal to buy USA telecom software firm BroadSoft for close to US$2 billion (S$2.7 billion), a person familiar with the matter said on Sunday.

Cisco has traditionally been a highly acquisitive company and this has continued in 2017, with data compiled by Bloomberg claiming this is the firm's ninth acquisition of the year.

Cisco Systems today announced that a definitive agreement of acquiring a US telecommunications software firm BroadSoft for close to $2 billion. Additionally, the amount also marks more than a 25% premium on the price of BroadSoft shares before Reuters reported on August 30 that the company was seeking a suitor to acquire it.

Shares of BroadSoft rose 1.41 per cent to $54.675 in early trading after the announcement, while Cisco's stock gained 0.96 per cent to trade at $34.575 per share, Xinhua reported on Monday.

The move is consistent with Cisco's strategic pivot away from expensive equipment and hardware to cloud-based software services.

Broadsoft is known for supplying software and services that allow fixed-line, cable and mobile service providers to offer integrated communications over their IP networks.

According to Cisco, the deal is expected to be concluded by the first-quarter of 2018.

Broadsoft has over 500 customers globally, but among those customers are communication providers such as AT&T or Verizon, who then resell Broadsoft's service to millions and millions to their customers worldwide. Lately, Cisco has been focusing on security, IoT and the cloud. Cisco CEO Chunk Robbins said that the deal will help improve the connections of Cisco's enterprise clients and small businesses with consumers.

"Every customer, when they think about their digital strategies, they think about how they interact with their customers", Robbins was quoted as saying.

The BroadSoft deal would be Cisco's second major acquisition this year following the US$3.7 billion acquisition of privately held AppDynamics in March. The company is also gearing up to acquire more companies.

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