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Cisco to buy Cerent for US$6.9 billion

Networking vendor Cisco Systems Inc. is reportedly set to make its largest acquisition to date, offering US$6.9 billion for the shares it does not already own in telecom and Internet router device maker Cerent Corp. Cisco already owns 8.2 per cent of Cerent through a US$13 million investment it made last year. Cisco is also due to announce plans to buy Richardson, Tex.-based networking company Monterey Networks Inc., for around US$450 million in stock. Acquiring Cerent would net Cisco expertise in optical networking technology through the company’s routing devices for directing Internet traffic. The technology is key to link up long-distance communications lines and local phone and data networks in order to cut down on network congestion. Monterey Networks also has experience in the area of routing traffic rapidly across fibre-optic lines. Cerent currently employs 226 staff and recently filed for an initial public offering likely to raise US$100 million. Cisco hopes to close both deals sometime in the company’s first fiscal quarter ending in October. Cisco has been on a bit of a spending spree lately. Last month alone, Cisco announced plans to: buy into Internet content delivery services start-up Akamai Technologies Inc.; purchase U.K.-based IP telephony company Calista Inc. for US$55 million in stock; and invest more than US$1 billion in U.S. accounting and consulting firm KPMG LLP to form an Internet consultancy group.

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