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Cisco finalising $2bn deal to acquire BroadSoft

Networking giant Cisco is reportedly in the final stages of a $2bn deal to acquire telecoms software firm BroadSoft. 

That’s according to a report by newswire Reuters, citing the usual “person familiar with the deal”, building on a report in August that suggested that the BroadSoft board was considering a sale.

If the deal goes through Cisco will be able to capitalise on the unified communications software industry, in a further move away from its core router hardware business.

The unidentified source told Reuters that the deal could be finalised as early as today. Neither of the companies have issued statements, but Bloomberg News also issued a report on Sunday suggesting that a deal was close.

Sales of switches and routers have broadly declined in recent years, while competition from the likes of Huawei and ZTE has intensified. These trends have forced Cisco to look for opportunities in related high-growth industries, such as cloud computing and Internet of Things/connected devices.

An acquisition of Broadsoft would be the company’s second biggest this year. In March, it paid $3.7bn for privately-held AppDynamics, which is based in San Francisco, California.

Founded in 1998, BroadSoft is a telecoms software provider with more than 500 customers worldwide. It develops products specifically for mobile, fixed-line and capable service providers.

On Friday, the company’s stock price closed at $54.90, giving it a market capitalisation of $1.67bn. Cisco would therefore be paying a modest premium. 

BroadSoft has typically developed products for large telcos, such as Verizon and ATT for sale to their customers. However, it’s recently been exploring ways to sell directly to these customer groups.

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