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The Deal: Cisco Acquires Sourcefire for $2.7B

Tuesday's transaction is expected to close by year's end, pending regulatory approval. After completion, Sourcefire employees are expected to join Cisco's security unit and will report to the division's senior vice president, Christopher Young. Demand for Web security companies has increased of late as worries about cyber hacking continue to mount. In May, Vista Equity Partners agreed to acquire Websense for $907 million in cash and Intel's (INTC) McAfee Inc. unit bought Finnish firewall maker Stonesoft for $389 million in cash.

Software conglomerates including San Jose, Calif.-based Cisco, which is led by chief executive John Chambers, and rivals Juniper Networks (JNPR) and IBM (IBM) are expected to be on the hunt for additional deals in the security space. In January, Cisco acquired Prague-based cybersecurity company Cognitive Security s.r.o for undisclosed terms.

Cisco shares opened 5 cents higher on Tuesday morning, to $25.75, with its market capitalization near $138 billion. n

--Chris Nolter contributed to this report.

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