27 July 2005 Cisco Systems is set to expand its network management capabilities having reached agreement to acquire Sheer Networks in a deal potentially worth $122 million.
Cisco has agreed to acquire the privately held Sheer for $97 million in cash. But that could rise to $122 million if product milestones are reached by the first quarter of 2006, when the deal is expected to close.
Sheer’s technology focuses on monitoring and managing complex network environments, and would extend Cisco’s ability to provide network management tools capable of operating in multi-vendor environments.
“Sheer has a similar philosophy and parallel architecture which will accelerate our delivery of Cisco’s next-generation management platform and advanced applications to our service provider customers,” said Cliff Meltzer, director of Cisco’s network management technology group.
The shift to provide multi-vendor network management is a recognition from Cisco that its large customers will operate heterogeneous networks, especially as they build out next-generation systems.
Sheer was founded in 1999 and has 110 employees, all of whom are expected to transfer to Cisco on completion of the deal.
The acquisition is Cisco’s eighth of 2005, and continues its strategy of expanding its product lines through strategic acquisition rather than through in-house development.
“More than the technology, Cisco looks at who is doing the development work,” said Mario Fabbi, an analyst at research group Gartner.