Starent to be acquired by Cisco for $2.9BOctober 13, 2009
by Rodney Brown
Boston Business Journal
Starent Networks Corp. has agreed to be acquired by Cisco Systems Inc. for $2.9 billion in cash. The Tewksbury, Mass.-based mobile networking infrastructure equipment maker says the deal is expected to close during the first half of 2010.
Cisco, based in San Jose, Calif., has agreed to pay $35 per share in cash in exchange for each share of Starent Networks (Nasdaq: STAR). The offer is a 17 percent premium over Starent’s Tuesday open of $30 a share.
The deal has been approved by the boards of directors of both companies. Cisco (Nasdaq: CSCO) officials said the acquisition will crimp non-GAAP earnings in fiscal 2010 and 2011 but will add to non-GAAP earnings in fiscal year 2012.
Starent Networks president and CEO Ashraf Dahod said Starent Networks’ mobile infrastructure technologies, when combined with Cisco’s strength in video and IP, will provide an integrated architecture for multimedia to mobile subscribers on 3G and 4G networks. Once the sale is complete, Starent will become the new Mobile Internet Technology Group under Cisco, to be led by Dahod, within Cisco’s Service Provider Business, which is led by general manager Pankaj Patel.
Founded in 2000, Starent Networks went public in 2007. The company has approximately 1,000 employees worldwide. For the year ended Dec. 31, 2008, Starent Networks reported revenue of $254.1 million and a profit of $60.5 million. The company raised roughly $80 million in venture capital prior to going public. Backers included Matrix Partners and North Bridge Venture Partners in Waltham, Mass., and Highland Capital Partners in Lexington, Mass.