By Angela Sutherland
Cisco Systems will acquire Scientific-Atlanta, which is a global provider of set-top boxes, end-to-end video distribution networks and video system integration.
Cisco Systems will acquire Scientific-Atlanta, whicb is a global provider of set-top boxes, end-to-end video distribution networks and video system integration.
Under the terms of the agreement, Cisco will pay US$43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options for an aggregate purchase price of approximately US$6.9 billion, or approximately $5.3 billion net of Scientific-Atlanta's existing cash balance.
The acquisition has been approved by the board of directors of each company and is subject to various standard closing conditions, including approval under Hart Scott Rodino and similar laws outside the US and by the shareholders of Scientific-Atlanta.
"Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," says John Chambers, president and CEO of Cisco Systems. "The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks. Moreover, Cisco's international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity," he adds.
Chambers says as consumers are demanding sophisticated information and entertainment services in their home, and tightly coupled applications, devices and networks will be essential. "We believe the combination of Cisco and Scientific-Atlanta will benefit our shareholders, customers and employees," says Jim McDonald, chairman and CEO of Scientific-Atlanta. "The combined strengths and resources of our two companies will position us to address the growing number of opportunities in the markets we serve and enable us to create new products and services that may not have existed otherwise."
Scientific-Atlanta has platforms and technologies that enable scaling to millions of subscribers quickly and easily. This, along with the Cisco IP next generation network architecture, will offer providers an open platform for service differentiation, allowing them to move beyond video/IPTV to develop and deliver a variety of integrated media services in the connected home.
Following the close of the transaction, Scientific-Atlanta will become a division of the routing and service provider technology group under the leadership of Cisco’s senior vice president Mike Volpi. Jim McDonald will report directly to Volpi. Prior to closing the deal, Cisco and Scientific-Atlanta will operate as separate businesses and will continue to work with their existing partners. Following the close of the transaction, Cisco says it is committed to retaining the relationships and go-to-market strategies that both companies have developed.
Scientific-Atlanta was founded in 1951 and has 7500 employees. For financial year 2005, which ended July 1,Scientific-Atlanta reported revenues of US$1.91 billion.