Cisco to buy security software maker Sourcefire for $2.7 billion

Cisco expects the acquisition to be slightly dilutive to non-GAAP earnings in fiscal year 2014
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First Published: Tue, Jul 23 2013. 07 56 PM IST
Cisco will pay $76 per share for the company, a premium of 28.6% over its closing price on Monday of $59.08. Photo: AFP
Cisco will pay $76 per share for the company, a premium of 28.6% over its closing price on Monday of $59.08. Photo: AFP
Cisco Systems Inc. said it will buy software maker Sourcefire Inc. for about $2.7 billion to increase its network security services.
Cisco will pay $76 per share for the company, a premium of 28.6% over its closing price on Monday of $59.08.
The network equipment company said the deal would likely close during the second half of 2013 and it expects the acquisition to be slightly dilutive to non-GAAP earnings in fiscal year 2014.
Cisco has lost market share in network security over the past few years to smaller, more innovative rivals such as Juniper Networks Inc., Check Point Software Technologies, and Palo Alto Networks Inc.
It fell behind in web applications, social media and video streaming that call for more complex security protection than traditional firewalls provide.
RBC Capital Markets analyst Robert Breza said the deal “removes a key competitor from the market for Check Point, Fortinet and Palo Alto (Networks) but also strengthens Cisco’s position in the space”.
It would also create a larger competitor in the network security industry, he said adding that Sourcefire would bring its real-time network awareness (RNA) and intrusion prevention system (IPS) technology to Cisco.
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First Published: Tue, Jul 23 2013. 07 56 PM IST
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