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Starent Networks Corp. is being bought by Cisco Systems Inc. in a cash-for-stock deal worth $2.9 billion. The Tewksbury-based mobile networking infrastructure equipment maker says the deal is expected to close during the first half of 2010.
Cisco, based in San Jose, Calif., has agreed to pay $35 per share in cash in exchange for each share of Starent Networks (Nasdaq: STAR) and assume outstanding equity awards. The deal has been approved by the boards of directors of both companies, according to officials. Cisco (Nasdaq: CSCO) officials said the acquisition will put a crimp on non-GAAP earnings in fiscal 2010 and 2011 but will add to non-GAAP earnings in fiscal year 2012.
Starent Networks president and CEO Ashraf Dahod said that combining Cisco’s strength in video and IP with Starent Networks’ mobile infrastructure solutions will provide an integrated architecture for multimedia to mobile subscribers on 3G and 4G networks. Once the sale is complete, Starent will become the new Mobile Internet Technology Group under Cisco, to be led by Dahod, within Cisco’s Service Provider Business, which is led by general manager Pankaj Patel.
Founded in 2000, Starent Networks went public in 2007. Prior to its IPO, Starent had raised more than $80 million in private funding from local investors including Matrix Partners, North Bridge Venture Partners and Highland Capital Partners, as well as from Focus Ventures of California, Itochu Corp. of Japan and Samsung Electronics Co. Ltd. of South Korea. The company has approximately 1,000 employees worldwide. For the year ended Dec. 31, 2008, Starent Networks reported revenue of $254.1 million and a profit of $60.5 million.
In August, Starent helped Verizon Wireless finish a test of fourth-generation wireless data network in Boston, based on the Long Term Evolution (LTE) standard, according to officials at New Jersey-based Verizon.
- North Bridge Venture Partners in Waltham owned a 15 percent stake in the company valued at $367.5 million
- Fidelity Investments owned 9.2 million shares valued at $322 million
- Matrix Partners in Waltham owned 8.1 million shares valued at $283.5 million
- Highland Capital Partners owned 3.7 million shares valued at $129.5 million
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