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Cisco to buy local software company Broadsoft for $1.9 Billion Featured

Cisco BroadsoftCisco Systems, the major Internet hardware provider, is buying Gaithersburg-based Broadsoft, Inc. for $1.9 billion; the companies made a joint announcement Oct. 23.

Broadsoft, which according to securities disclosures has about 200 employees at two locations in Gaithersburg, supplies corporations with software platforms for customer service, internal communications, and cloud migration. It has customers in 80 countries, including 25 of the 30 largest Internet service providers worldwide, ranked by revenue.

While headquartered in Gaithersburg, Broadsoft has more than 1,700 employees worldwide.

For San Jose, Calif.-based Cisco, the Broadsoft acquisition is part of a wide-ranging move in the last several years to add web and cloud applications and services to its product portfolio, explained Rowan Trollope, Cisco senior vice president, in a telephone press conference. Broadsoft also brings in many small- and medium-sized businesses to Cisco as customers, he said.

During the press conference, Broadsoft CEO Michael Tessler said combining his company and Cisco “will allow us to deliver best-in-class collaboration tools and services” to businesses moving their data and operations to the cloud.

Cisco is paying cash for all of Broadsoft’s roughly 27 million shares at $55 per share. The deal price is only about $1 more per share than the price just before the acquisition was publicly announced. According to its quarterly disclosures, Broadsoft’s profits have fallen in recent years, down to less than $1 million on sales of $341 million in 2016.

Cisco Vice President Rob Salvagno noted in the press conference that the company recently completed its 200th acquisition since its founding in the 1980s.

“Acquisitions continue to be a core part of our innovation strategy, and over the past two years, have helped Csico accelerate or enter areas such as Internet of Things, application intelligence, [and] artificial intelligence,” Salvagno said.

The acquisition deal is expected to close in the first quarter of 2018, and is subject to regulatory review and normal closing conditions. According to the press release announcing the transaction, once the deal is finalized, “Broadsoft employees will join Cisco’s Unified Communications Technology Group led by [Cisco] Vice President Tom Puorro, under the Applications Group led by Trollope.”

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