Cisco to buy WebEx for $3.2 billion

NEW YORK (CNNMoney.com) -- Cisco Systems, the biggest maker of gear for the Internet, said Thursday it agreed to buy WebEx, a maker of online collaborative software that went public during the dot-com boom, for $3.2 billion.

The deal for Santa Clara, Calif.-based WebEx will position San Jose, Calif.-based Cisco (down $0.04 to $25.81, Charts) to move deeper into the growing market for online software, especially for small- to medium-sized businesses.

WebEx (up $10.18 to $56.38, Charts) shares soared on news of the deal, jumping 22 percent in active Nasdaq trading. WebEx, founded in 1995, went public in 2000 and currently has some 2,200 employees.

Under the terms of the deal, Cisco will buy all outstanding shares of WebEx for $57 a share in cash, a 23 percent premium over WebEx's Wednesday closing price on the Nasdaq of $46.20.

Cisco, a large maker of routers, switches and equipment used for Internet infrastructure, had sales of $28.4 billion in 2006. The company had 38,413 employees in 2005, according to Hoovers.

WebEx, which generated revenues of $380 million in 2006, provides Web-based conferencing software and systems and other collaborative online applications.

The acquisition, in a string of many that have propelled Cisco's growth,will allow further expansion for the network equipment maker.

A top Cisco Systems Inc. executive told Reuters on Thursday that the network equipment maker may make more large acquisitions.

Chief Development Officer Charles Giancarlo said WebEx may look like a large acquisition, but it would amount to less than 2 percent of Cisco's revenue and market capitalization.

"So I think that we will start to see more of these," he told Reuters in a phone interview.

-------------------------------------------

Cisco in social networking play

Tech sectors and stocks