Cisco to Buy Aironet for About $800 Million in Stock

Cisco (CSCO Quote) Tuesday agreed to acquire Aironet Wireless Communications (AIRO Quote) for nearly $800 million in stock, continuing Cisco's quest to expand its Internet business opportunities.

Shares for the San Jose, Calif.-based networking giant slipped fractionally, dropping 13/16 to 74 1/2, in early afternoon trading. Aironet's stock rose 2 15/16 to 46 3/16. [Cisco closed down 1 1/16 to 74 1/4 while Aironet closed up 2 1/16 to 45 3/8.]

The acquisition of the Akron, Ohio-based company will give Cisco's customers wireless access to their local area networks.

Aironet Wireless Communications shares will be converted into 0.637 Cisco common share. Based on Cisco's closing price of 75 5/16 on Monday, the transaction has a value of about $799 million. Cisco expects to take a third-quarter charge of 3 to 8 cents a share for purchased in-process research and development expenses.

The acquisition, the 14th made by Cisco this year, has been approved by the board of directors of each company but still faces regulatory review.

Charlie Giancarlo, a senior vice president for Cisco, said the acquisition, which is his company's third largest this year, marks the first in Cisco's small-medium line of business in three years. He called it "a very important" deal that was completed in two weeks once Cisco decided it wanted to acquire Aironet.

Cisco is expected to report earnings for its fiscal first quarter after the market closes Tuesday afternoon.