To expand in the growing software area than core business, Cisco Systems Inc., on Thursday announced to buy cyber -security company Duo for $2.35 billion in cash and stock. Duo sells tools that to secure user’s online accounts for businesses with 2-step authentication process and single sign-on services.

David Goeckeler, an executive vice president and Cisco’s general security manager reported Fortune, a global media magazine, that this purchase will help them to allow customers to connect securely any user on any device over any network to any application.

After the purchase of business performance monitoring software firm AppDynamics in last year for $3.7 billion, this deal will be the biggest acquirement for Cisco and largest acquisition in cyber security after the takeover of Sourcefire in 2013 for $2.7 billion.

In a conference call on Thursday, Robert Salvagno, head of Cisco’s corporate development department said that this deal is an example of expanding in software and attaining recurring revenues with subscription based solutions.

Most of the companies are in search to cyber-security groups to avoid the cyber-attacks by spies, hackers and criminals to get access to company’s secured data. Telecommunications company AT&T purchased a cyber security provider, AlienVault for its small and medium scale businesses.

Brad Zelnick, an analyst at Credit Suisse commented that Cisco is making its cyber security market strong as it has already acquired five security firms in last 3 years. On Thursday, Cisco shared 1.6 per cent at $42.54.

This deal has led to multi-billion dollar exit for cyber security companies that had invested lot of money in the market. As per an advisory firm Momentum Cyber, there are more than 3000 cyber security firms of which more than 400 are being funded every year.

Benchmark, venture capital firm, earned 20 times return on its investment in the company, but Benchmark has disagreed to this comment.

Duo which is based in Ann Arbor, Michigan, had earned $119 million till date many investors like Workday, Lead Edge Capital, Index Ventures, True and Redpoint Ventures.

A product used by Cisco employees for their customers where they connect securely to cloud applications, Duo ensures users to verify their identification using 2- step authentication.

As reported by Reuters, this deal will be closed in first quarter of Cisco’s financial year 2019 as regulatory approval is still pending.

Cisco is already taking efforts to expand in sector’s other than networking like security, internet and cloud-based applications.

Cisco was directed by Goldman Sachs, Barclays and law firm Fenwick & West whereas Duo was guided by Qatalyst Partners and Gunderson Dettmer law firm.


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