Cisco to buy Linksys

Cisco Systems is back on the acquisition road, and with it's large "cheque book", plans to snap up wireless vendor Linksys Group Thursday in a stock deal valued at $500 million.

Linksys and Cisco both make products for the growing wireless LAN (WLAN) market, but Linksys is particularly strong among home users of WLAN access points and routers. Cisco sells similar products to corporations. The deal was struck so Cisco could enter the home and small business market for WLAN products, the company said in a release.

The companies have reached an agreement under which Cisco will issue about $500 million in common stock to purchase Linksys, based in Irvine, California , and cover its employee stock options, Cisco said.

"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 CEO of Cisco Systems.

"This acquisition is a solid example of Cisco's strategy to broaden its end-to-end portfolio of network solutions into high-growth markets such as wireless, voice-over-IP and storage area networking" says John Chambers.

News source: InfoWorld