SAN JOSE, Calif., and LAWRENCEVILLE, Ga. – Saying this deal will completes Cisco’s end-to-end triple play solution for networks and the home, telecommunications manufacturer Cisco Systems has agreed to purchase cable equipment maker Scientific-Atlanta for US$6.9 billion.
The combined entity creates an enormous end-to-end triple play solution for carrier networks and the digital home.
It also increases certain MSOs exposure to Cisco because many also operate Cisco CMTS’s to run their VOIP and Internet backend. In Canada, Videotron and Rogers Cable are the only two widely-deployed users of Scientific Atlanta technology. The rest of the Canadian industry is Motorola-based.
For now, one source told www.cartt.ca, Cisco has told S-A customers nothing will change and it will be business as usual for them for a while.
Upon closure of the deal, the market opportunities represented by the S-A acquisition will become part of Cisco’s Advanced Technology portfolio.
Cisco will pay US$43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options. The transaction is expected to close in the third quarter of Cisco’s fiscal year 2006.
The acquisition has been approved by the board of directors of each company and is subject to various standard closing conditions, 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,” said John Chambers, president and chief executive officer of Cisco Systems, in the press release. “The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco’s commitment to and leadership in the service provider market. Moreover, Cisco’s international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity.
“As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco’s leadership position across the entire networked digital home,” continued Chambers.
“We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers and our employees,” said Jim McDonald, chairman, chief executive officer and president of Scientific-Atlanta. “The combined strengths and resources of our two companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might 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 senior vice-president Mike Volpi. McDonald will report directly to him.
Prior to the close, 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 is committed to retaining the relationships and go-to-market strategies that both companies have developed.
Scientific-Atlanta was founded in 1951 and held its Initial Public Offering (IPO) on July 29, 1959. The company has more than 7,500 employees. For FY2005, which ended July 1, 2005, Scientific-Atlanta reported revenues of US$1.91 billion.
