The market for tech companies is heating up again, as Cisco strengthens its position in Web and mobile security.
In a deal that underscores the shift toward cloud computing, Cisco on Tuesday said that it had reached an agreement to acquire ScanSafe, a privately-held provider of software-as-a-service (SaaS) Web security for businesses.
Cisco said the acquisition will cost $183 million in cash and retention-based incentives.
Tom Gillis, VP and general manager of Cisco's security technology business unit, who arrived at Cisco via its 2007 acquisition of IronPort, described the purchase as part of Cisco's effort "to build a borderless network security architecture that combines network and cloud-based services for advanced security enforcement."
The Web security market, which Cisco expects to grow to $2.3 billion by 2012, appears to be in the midst of consolidation. Earlier this month, Barracuda Networks, a maker of security hardware, acquired SaaS Web security provider Purewire for an undisclosed sum.
In an e-mail, Jay Chaudhry, CEO of Zscaler, another SaaS Web security company, characterized the acquisition as validation of the SaaS model for Web security.
Cisco said it intends to combine its IronPort Web security appliance with ScanSafe's Web security service to offer on-premises, hosted, and hybrid-hosted Web security.
The company also expects to integrate ScanSafe's service with Cisco's AnyConnect VPN Client to enhance security for mobile workers.
The acquisition is Cisco's sixth this year and its first security-related purchase since 2007. That year, in addition to IronPort, Cisco purchased two other security-related companies: BroadWare Technologies and Securent.
Cisco's last security buying binge occurred in 2004 and 2005, when it acquired seven security-related companies.
Cisco said that it expects the deal to close in the second quarter of Cisco's fiscal year 2010, which ends in January.
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