Source: Cisco
Cisco is having a good week. On Monday, Cisco (NASDAQ: CSCO) announced its intention to acquire BroadSoft (NASDAQ: BSFT), a cloud-based communications and collaboration solutions provider, for approximately $1.9 billion. Though the acquisition must jump through regulatory hoops first, both companies’ boards have approved the sale, which is expected to close in the first quarter of 2018. Until then, the companies will operate separately. This announcement comes just four days after Cisco announced its intent to purchase Perspica, Cisco’s 200th acquisition, making the BroadSoft acquisition number 201.
‘Together, Cisco and BroadSoft will deliver a robust suite of collaboration capabilities across every market segment,’ said Rowan Trollope, senior vice president and general manager of Cisco’s Applications Business Group. ‘We believe that our combined offers, from Cisco’s collaboration technology for enterprises to BroadSoft’s suite for small and medium businesses delivered through Service Providers will give customers more choice and flexibility.’
Rob Salvagno, vice president of Cisco Corporate Development, explains the acquisition in simpler terms in a blog post:
Source: BroadSoft
‘We chose BroadSoft as it provides a portfolio of cloud collaboration platforms and business applications, which strengthen our cloud investments and ability to deliver collaboration solutions to our global telecom provider customers. Following the close of the acquisition, Cisco and BroadSoft will provide a comprehensive SaaS portfolio of cloud based unified communications, collaboration, and contact center software solutions and services for customers of all sizes,’ Salvagno said.
‘Together, we are committed to redefining the future of work and collaboration to help businesses perform in ways never before imagined, with the flexibility to deploy them on-premises or in the cloud and to better meet the calling and contact center needs of our SMB and mid-market customers,’ added Salvagno.
The acquisition will connect Cisco with hundreds of partnerships that BroadSoft has cultivated over the years, including more than 450 telecom carriers in 80 countries to more than 19 million BroadSoft business subscribers.
‘We are excited about this transaction, which represents the culmination of a robust process undertaken by BroadSoft’s Board of Directors to maximize shareholder value,’ said BroadSoft president and CEO Michael Tessler in the announcement.
‘As businesses continue to move toward the cloud in search of simplicity and speed, joining Cisco will allow us to deliver best-in-class collaboration tools and services. BroadSoft’s hosted offerings, sold through the Service Providers and aimed at small and medium businesses, are highly complementary to Cisco’s on-premises and enterprise-centric HCS offerings. Together, we can inspire teams to create, collaborate and perform in ways never before imagined,’ said Tessler.
According to Fox Business, BroadSoft has been growing at a rate of 20 percent per year over the last several years, but its subscription business has been growing at double that rate. The company’s 2016 annual report shows that subscription and maintenance support generated $146.6 million in revenue, comprising about 43.0 percent of total revenue. License software generated $129.3 million, and professional services and other generated $65.0 million in revenue.
The announcement of the acquisition did not have a significant impact on Cisco’s stock price. On Friday, October 20, 2017, stock closed at $34.25 per share. The day the announcement was made, Monday, October 23, Cisco stock was valued at $34.35. As of 7:43 PM Eastern yesterday, Cisco stock was valued at $34.30 per share.
Source: Google Finance – Yahoo Finance – MSN Money
Insider Take:
With 201 strategic acquisitions to its credit, Cisco continues to grow to meet customer demand, partnering with companies like BroadSoft who have a wide reach, innovative technology and complementary products and services. Salvagno sums up the strategy nicely in his blog post about the Perspica acquisition:
‘Throughout the years we have used acquisitions in concert with our internal research and development engine and they continue to be a part of our build, buy, partner, invest and co-develop approach to innovation,’ Salvagno said.
We expect to see more acquisitions in 2018.
