Cisco Continues Acquisitions Spree with a £750 Million Meraki Takeover

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on Nov 19, 2012

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Cisco Continues Acquisitions Spree with a £750 Million Meraki Takeover

Networking giant Cisco (NASDAQ:CSCO) has announced it is buying San Francisco-based Meraki in an attempt to improve its internet-cloud networking capabilities.

**Meraki Acquisition**
Cisco said it is paying about £750 million in cash and retention-based incentives to buy the entire business and operations of Meraki. The deal is expected to be completed by the end of the second quarter of Cisco’s fiscal year.
Meraki was founded in 2006 by doctoral candidates from the Massachusetts Institute of Technology and currently has offices in London, New York and Mexico. The company offers cloud network management, which allows firms and their IT departments to manage their installed software, devices and networks through a dashboard in a web browser.

“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises,” said Rob Soderbery, senior vice president of Cisco Enterprise Networking Group. “These companies have the same IT needs as larger organisations, but without the resources to integrate complex IT solutions,”

Meraki has raised about $80 million (£50.3 million) through four investment rounds involving Google and venture capital firms such as Northgate Capital, Sequoia Capital and DAG Venture.
Shares in Cisco increased 1.06 percent to $18.18 in today’s trading session.
**Cloupia Buy Out**
!m[The Networking Giant Eyes Eighth Takeover of The Year](/uploads/story/845/thumbs/pic1_inline.png)According to the New York Times, Cisco has been very active this year in mergers and acquisitions, having announced eight takeovers so far. Last week the networking giant said it plans to buy Cloupia – a software company that helps customers automate their data centres – for $125 million (£78.7 million). Paul Perez, chief technology officer at Cisco, said the acquisition will allow the company to offer customers “universal” control over services and storage arrays sold by different vendors. “With Cloupia, we now have access to adjacent markets that we didn’t have before,” he said.

**Quarter Results**
On 13 November Cisco also announced its first-quarter results. The company topped analysts’ expectations with profit jumping 18 percent from $1.78 billion (£1.12 billion) in 2011 to $2.09 billion (£1.32 billion) this year. Wall Street’s forecast of 4 percent growth turned out wrong as the company registered a 6 percent increase in revenues to $11.9 billion (£7.49 billion).

According to John Chambers, chief executive, the company’s rebound is mainly propelled by the US market. “The US has to lead the total globe out of this slowdown,” Mr Chambers said. “It’s not going to come from Europe, and the emerging economies are not strong enough.”
Cisco’s sales growth dropped in Europe by 10 percent amid unfavourable business conditions. In China the company fell out of grace after a press report in the US identified it as a source for a recent, highly critical Congressional report into Chinese manufacturer Huawei. The Financial Times wrote that Mr Chambers has denied any leakage of information from his company to the committee, apart from an earlier report related to a legal battle fought between Cisco and Huawei years ago.