Cisco Systems, Inc. (NASDAQ:CSCO) Enters $635 Million Deal for Acquisition of OpenDNS

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Cisco Systems, Inc. (NASDAQ:CSCO) Announced on Tuesday that it entered a $635 Million deal to acquire a web security company called OpenDNS.

The web security firm was formed in 2006 and operates a series of domain name servers that it uses to reroute internet traffic. The company competes with servers from telecommunication carriers and internet service providers. Companies and individuals use OpenDNS to gain access to websites at a much faster pace. The company currently hosts 65 million users and has 25 data centers in operation.

OpenDNS hosts major companies including NVIDIA Corporation (NASDAQ:NVDA), Netflix, Inc.(NASDAQ:NFLX), BP, and a few others. After the acquisition, David Ulevitch, the current CEO will step down from the company. Mr. Ulevitch founded the company immediately after finishing college. Greylock, Sequoia Capital, Chris Sacca and Sutter Hill Ventures are among the investors who contributed to the three rounds that raised $51 million for the startup. The company has been registering positive performance since 2007.

The deal is also the first high potential acquisition for Cisco since the announcement that Chuck Robbins will be the company’s new Chief Executive. Cisco is best known for manufacturing equipment used for facilitating the transition of internet data and communications. The company also deals with security software and services.

Cisco has been very active over the past few years. The company has been carrying out intensive investments to diversify and strengthen its business. In 2014, Cisco bought out a cyber-security company called Source fire for $2.7 billion. It also acquired another company called Threat Grid Inc. that deals with malware detection. Cisco’s security ventures accounted for 4.3% of the company’s revenue in 2014.

David Goeckeler, Cisco’s senior vice president for the company’s security ventures pointed out that the new acquisition is strategic because the internet traffic monitored by OpenDNS will refine Cisco’s threat detection as well as its response to security threats.

The acquisition transactions are expected to come to a close in the first quarter of 2016.

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