Cisco To Buy Security Software Maker Sourcefire For $2.7 Bln

(RTTNews) - Networking gear maker Cisco Systems Inc. (CSCO) has agreed to acquire cybersecurity solutions provider Sourcefire Inc. (FIRE) for about $2.7 billion in cash, the two companies said Tuesday.

Cisco noted that the acquisition will enable the company to boost its network security offerings. Shares of Sourcefire are gaining almost 28 percent in the regular trading session following the announcement.

Under the terms of the deal, San Jose, California-based Cisco will pay $76 per share in cash in exchange for each share of Sourcefire and assume outstanding equity awards, including retention-based incentives.

The per share acquisition price represents a 29 percent premium to Sourcefire's closing stock price of $59.08 on Monday. The deal has been approved by the board of directors of both companies.

Cisco makes the routers and switches that direct computer and telecommunications traffic over corporate networks and the Internet.

According to Cisco, the Sourcefire acquisition will enable it to accelerate delivery of its security strategy of defending, discovering, and remediating advanced threats. Cisco noted that with research teams, increased intelligence and expanded threat protection, customers will benefit from continuous security in more places across the network.

Columbia, Maryland-based Sourcefire was founded in 2001 and completed its initial public offering in 2007. The company has more than 650 employees worldwide. For the full year ended December 31, 2012, Sourcefire reported revenue of $223.1 million, an increase of 35 percent year-over-year.

Cisco is aggressively pursuing an acquisition-led growth strategy, diversifying its business and entering consumer markets. During the recent third quarter, Cisco completed the acquisitions of Intucell, Ltd. and Cognitive Security. The company also announced its plans to acquire SolveDirect and Ubiquisys.

Hilton Romanski, vice president, Cisco Corporate Development said, "Sourcefire aligns well with Cisco's future vision for security and supports the key pillars of our security strategy. Through our shared view of the critical role the network must play in cybersecurity and threat defense, we have a unique opportunity to deliver the most comprehensive approach to security in the market."

Martin Roesch, founder and chief technology officer of Sourcefire said, "Cisco's acquisition of Sourcefire will help accelerate the realization of our vision for a new model of security across the extended network. We're excited about the opportunities ahead to expand our footprint via Cisco's global reach, as well as Cisco's commitment to support our pace of innovation in both commercial markets and the open source community."

The two companies expect the transaction to close during the second half of calender year 2013.

Prior to the close of transaction, Cisco and Sourcefire will continue to operate as separate companies. Following closure of the transaction, Sourcefire employees will join the Cisco Security Group led by Christopher Young, and Cisco will include Sourcefire into its guidance going forward.

Cisco expects the acquisition to be slightly dilutive to its fiscal 2014 adjusted earnings, due to normal purchase accounting adjustments and integration costs.

In Tuesday's regular session, CSCO is trading at $25.52, down $0.19 or 0.76 percent on a volume of 4.97 million shares.

FIRE is trading at $75.51, up $16.43 or 27.81 percent on a volume of 6.46 million shares.