Cisco to pay $2billion for Pirelli division

Cisco to pay $2billion for Pirelli division

Cisco Systems has agreed to acquire the optical networking systems division of Italy's Pirelli SpA in a deal valued at more than $US2 billion, Pirelli said in a statement issued yesterday.

As part of the agreement, Cisco will also take a 10 percent equity investment of $100 million in Pirelli's newly formed optical components division and submarine optical transmission systems division, the statement said.

The acquisition is only the latest from Cisco in the area of fibre optics. In August it agreed to pay a total of $7.7 billion to acquire start-ups Cerent and Monterey Networks. And on Friday last week, it said it would pay $25 million to acquire Internet Engineering Group LLC (IEng) of Ann Arbor, Michigan, a privately held company that makes high-performance software for controlling optical networks.

Pirelli said the deal with Cisco will strengthen its position in the US market and help boost revenues for the Italian firm's cables and systems division.

Twenty percent of the $2.15 billion acquisition price will be contingent on the Pirelli division reaching certain revenue targets and other performance milestones, Pirelli said in the statement.

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