Cisco To Buy Allegro Systems for $181M - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Cisco To Buy Allegro Systems for $181M

Cisco to buy Allegro Systems for $181 million.

With a deal struck Friday to buy Allegro Systems Inc. for $181 million, Cisco Systems is suddenly back in the acquisition game. After acquiring nearly two dozen companies last year, Cisco made no acquisitions in the first six months of this year.

Now, within two weeks, Cisco has bought two companies. In Friday's deal, Cisco will buy Allegro for up to $181 million in Cisco common stock. Cisco expects to complete the purchase by September, resulting in a one-time charge for Cisco of less than a penny a share.

Allegro makes acceleration systems for use in virtual private networks (VPNs). Corporations use VPNs as alternatives to more expensive dedicated data circuits, which they replace by letting customers set up secure, encrypted connections on a private IP network or the Internet.

According to Cisco, it will use Allegro's VPN acceleration technology to enhance the performance of its own VPN products. Allegro's technology also will let Cisco increase the number of simultaneous VPN connections supported on a VPN device.

Earlier this month, Cisco struck a $150 million deal to buy privately held AuroraNetics Inc., based in San Jose, Calif. AuroraNetics is an integrated circuit vendor specializing in chips used to route traffic in metropolitan area, next-generation IP-based networks using Resilient Packet-Ring technology.

With the two acquisitions, "Cisco is looking at ways to improve its technology moving forward," especially in key technology sectors that the company believes will show the most growth, says Yankee Group analyst Zeus Kerravala.

"This is a very focused buy to enhance Cisco's VPN offering, which Cisco takes very seriously," Kerravala adds. In combination with the AuroraNetics acquisition a couple of weeks ago, the deal also shows that Cisco believes it's on a strong enough financial footing to acquire strategic technologies. That's in contrast to Cisco rivals such as Lucent Technologies, says Kerravala, which is struggling just to survive.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of Cloud Computing - Fall 2020
The State of Cloud Computing - Fall 2020
Download this report to compare how cloud usage and spending patterns have changed in 2020, and how respondents think they'll evolve over the next two years.
Top 10 Data and Analytics Trends for 2021
Jessica Davis, Senior Editor, Enterprise Apps,  11/13/2020
Where Cloud Spending Might Grow in 2021 and Post-Pandemic
Joao-Pierre S. Ruth, Senior Writer,  11/19/2020
The Ever-Expanding List of C-Level Technology Positions
Cynthia Harvey, Freelance Journalist, InformationWeek,  11/10/2020
Register for InformationWeek Newsletters
Current Issue
Why Chatbots Are So Popular Right Now
In this IT Trend Report, you will learn more about why chatbots are gaining traction within businesses, particularly while a pandemic is impacting the world.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll