Cisco to purchase Sourcefire for US$2.7 billion

August 3
5:33 AM 2013

Cisco Systems recently announced its plan to purchase Sourcefire for US$2.7 billion. The move would help the networking titan in an area where it already started to fall behind.

Cisco would pay US$76 in cash for every share of Sourcefire, up to 28% premium to where the stocks were exchanged before the agreement. Sourcefire said it has more than 2,500 clients in 180 countries. It targeted medium and large corporations including the government agencies. For ten years, the top line of Sourcefire increasingly grew. It only became profitable in 2009 following its net loss of shares. Its sales declined in the first quarter in contrast with its records during 2012's fourth quarter. However, the weaknesses appeared to be Cisco's buying opportunity which led to the deal.

Analysts said that Cisco's acquisition of Sourcefire would let it address its weaknesses. It would further make Cisco, which yielded 2.7% earnings from the last quarter, worth a look for progress and income venture capitalists. Also, Cisco said that its price to earnings ratio of 14 was two points less than its five-year average.

Analysts concluded that the acquisition would make the cyber protection industry grow. MarketResearchReports.Biz projected that from 2013 to 2023, North America would spend US$93.6 billion on cyber security. Asia-Pacific was forecasted to spend around US$23.2 billion, followed by Middle East with US$22.8 billion and Latin America with US$1.6 billion. 

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