SAN JOSE, Calif., April 11, 2000 - Cisco Systems, Inc., today announced a definitive agreement to acquire privately-held Pentacom, Ltd., based in Herzliya, Israel. Pentacom is a leading provider of products implementing Spatial Reuse Protocol (SRP) which allows IP based metropolitan networks to offer the same protection and restoration benefits as SONET-based networks while doubling bandwidth efficiency. Pentacom's technology provides fiber management and hubbing for IP transport networks. This acquisition underscores Cisco's New World strategy to deliver end-to-end IP based solutions for service providers to deploy advanced data, voice and video services.
Under the terms of the agreement, Cisco common stock with an aggregate value of approximately $118 million will be exchanged for all outstanding shares and options of Pentacom. Cisco made an 11% minority investment in Pentacom in June 1999. In connection with the acquisition, Cisco expects a one-time write off of up to $.01 per share for purchased in-process research and development expenses. The acquisition has been approved by the board of directors of each company and is expected to close in Q4 of Cisco's FY 2000. This transaction is subject to various closing conditions.
Cisco is acquiring Pentacom to expand its product portfolio to help service providers build more flexible, manageable and cost effective, end-to-end IP based networks. As bandwidth requirements and the use of IP in metropolitan markets increase, service providers are demanding equipment optimized for transporting and managing IP traffic over an optical infrastructure.
Pentacom's 48 employees will be led by CEO Benny Schnaider, who has been CEO of Pentacom since its inception in late 1998. Pentacom will join the Public Carrier IP Systems Group within Cisco's Service Provider Line of Business. The team will be relocated to Cisco's existing Herzliya development center, very close to Pentacom's existing offices.