Cisco Buys Cloud-Networking Firm for $1.2 Billion

Cisco on Sunday announced its intention to acquire Meraki Inc. for $1.2 billion in an effort to continue building its cloud networking services.

The deal requires Cisco to pay $1.2 billion in cash and retention-based incentives, and is expected to close in the second quarter of 2013.

“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base,” Rob Soderbery, senior vice president of the Cisco Enterprise Networking Group, said in a statement.

San Francisco-based Meraki offers customers Wi-Fi, switching, security, and mobile device management from the central cloud. The company also supports BYOD, guest networking, application control, WAN optimization, application firewall, and other advanced networking services.

CEO Sanjit Biswas wrote in a letter to Meraki employees that the deal was an unexpected one for his company, which was founded in 2006 by members of MIT’s Laboratory for Computer Science.

“When Cisco approached with an acquisition offer a few weeks ago, our initial reaction was to politely say ‘thanks, but we’re planning to do our own thing and take Meraki public,’” Biswas said. “It turned out that was exactly why they were interested in talking to us.”

Word about Meraki got around in the last six years, as the company developed what Biswas called “an innovative product,” and customers, partners, and analysts lauded the company’s work.

“Meraki built a unique cloud-based business from the ground up that addresses the broader networking shift towards cloud, not just within wireless,” Cisco’s vice president of corporate business development, Hilton Romanski, wrote in a blog post. “They didn’t obsess about the number of features, but instead focused on those that could be simplified or removed entirely.”

Meraki currently has 20,000 customers and hundreds of thousands of network devices using its cloud platform, Romanski said.

With Meraki’s cloud networking solutions, Cisco plans to expand its network by providing scalable solutions for its midmarket business clients. The agreement is expected to strengthen Cisco’s Unified Access platform, making IT more responsive by simplifying operations and connecting wired and wireless networks, policy, and management into one integrated network.

The company made technological strides when it announced in January 2011 the release of cloud-managed routers. The Meraki MX series features cloud-based centralised management, allowing businesses to deploy the devices in a data center, and manage networks remotely via a Web browser.

Meanwhile, Meraki also introduced a new Networking as a Service pricing program, a pay-as-you-go model for cloud-managed network infrastructures.

According to Biswas, the company will operate separately until the acquisition closes, at which point employees are expected to transfer from Meraki to Cisco.

Source: PC Mag