Cisco Grabs Ubiquisys for $310 Million

NEW YORK ( TheDeal) -- Cisco Systems ( CSCO) said Wednesday, April 3, that it will acquire venture capital-backed mobile connectivity tech business Ubiquisys Ltd. for $310 million.

San Jose, Calif.-based Cisco was little changed Thursday at $21.03. Shares have gained 7% this year.

The purchase of the U.K. target is the fourth acquisition made by Cisco this year. The networking equipment company has utilized mergers and acquisitions to enhance its data security, cloud-service, and connectivity capability and expand its international footprint.

Swindon, U.K.-based Ubiquisys was founded in 2004 by its chief technology officer, Will Franks. The company's products are based on femtocells, which are wireless systems that mimic commercial cellular base stations for use in a home or office. It introduced a device called ZoneGate, a small plug device that attaches to a user's broadband connection. A user can connect his or her cellphone to the device and use voice over Internet protocol to make calls.

"Ubiquisys helps deliver a complete transmission solution across different protocols ," said Hilton Romanski, vice president of corporate development for Cisco, in a Wednesday interview. "Networks are supporting more and more traffic. It helps address a customer problem in access today."

Cisco has worked with Ubiquisys for the past two years, Romanski said. The deal should help Cisco become more adept at processing digital information across different mediums.

"The rate of change, given the ubiquity of mobile devices and more and more content being made available, has absolutely skyrocketed," Romanski said. "You've got 10 billion connected devices forecasted in the next five years. That's all contributing to a significant challenge for the average mobile service provider."

The target has a robust history of venture capital funding, securing around $70 million through five rounds over the past six years, according to The Deal Pipeline.

Investors include Accel Partners, Advent Venture Partners LLP and Atlas Venture, which has funded the company since the first $12 million round. Google Inc. was involved in the second $25 million round and global investment firm 5 Continents Consulting Group was involved in the third $9 million round. Later investors included Taiwan's UMC Capital Corp., involved on the fourth round worth $5 million, and Japan's Nissay Capital Co. Ltd., involved on the last round worth $19 million.

Cisco, led by CEO John Chambers, will absorb Ubiquisys employees into its service provider mobility group and they will report to Partho Mishra, vice president and general manager for Cisco's service provider small cell technology group. The deal should close by July 27, the end of Cisco's fiscal fourth quarter.

Cisco bought Ra'anana, Israel, networking software company Intucell Ltd. for $475 million on Jan. 23. It then bought Prauge-based cybersecurity company Cognitive Security on Jan. 29 and Vienna cloud service company SolveDirect on March 25, both for undisclosed terms. Cisco said the Ubiquisys acquisition complements the Intucell purchase.

A Ubiquisys spokeswoman declined comment on Wednesday's deal.

Written by Thomas Zadvydas in New York