Cisco Systems is to acquire The Linksys Group of Irvine, CA – a privately held provider of home networking products.
The acquisition represents Cisco’s entry into the consumer/SOHO (Small Office/Home Office) networking market, which is expected to grow from $3.7 billion in 2002 to $7.5 billion in 2006 world-wide.
Home networks allow consumers to share broadband Internet connections, files, printers, digital music, photos, and gaming, all over a wired or wireless LAN (local area network).
Under the terms of the agreement, Cisco will issue common stock with an aggregate value of approximately $500 million to acquire the Linksys business and to assume all outstanding employee stock options.
The Linksys Group was founded in 1988 and has 308 employees. The Linksys business, led by Victor Tsao, chief executive officer, will be operated as a division of Cisco reporting to Charlie Giancarlo, Sr. Vice President and General Manager, Product Development.
The acquisition is expected to close in the fourth quarter of Cisco’s fiscal year 2003.