Cisco Systems to Buy Set-Top Maker Scientific-Atlanta

Nov 18, 2005  •  Post A Comment

Computer networking giant Cisco Systems agreed Friday to acquire cable set-top box maker Scientific-Atlanta for $6.9 billion in a deal that both companies said will seek to capitalize on the convergence taking place among video, voice, data and mobile technologies.

The deal, which the companies expect to close next year, will give Scientific-Atlanta the resources it needs to develop products that take advantage of the convergence trends currently rocking the telecommunications industry. For Cisco, the transaction brings it closer to consumers-something the company has been putting energy behind recently.

“Video is an integral part of our strategy that must be part of our core competency,” said Cisco CEO John Chambers.

Jim McDonald, Scientific-Atlanta’s CEO, said the deal will give his company access to more resources to develop products being demanded by cable operators and consumers, including digital video recorders that can also burn DVDs.

Under the terms of the deal, Cisco will pay $43 per share for Lawrenceville, Ga.-based Scientific-Atlanta, using a combination of cash and stock. Scientific-Atlanta will become a unit of Cisco’s routing and service provider technology group.

Mr. McDonald will stay on for two years, reporting to Cisco Senior VP Mike Volpi, who runs the division that Scientific-Atlanta will join. Other members of Scientific-Atlanta senior management have also agreed to stay with the company.

Scientific-Atlanta’s customers include cable operators such as Time Warner Cable and Cablevision, while Cisco provides network routers and other telephony services to many cable operators.