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Comms chips

Cisco Plans $320M Network Chip Acquisition

Cisco said Wednesday it plans to acquire Leaba Semiconductor, a stealthy, venture-backed fabless chipmaker based in Israel, for $320 million.

"Leaba is a team with a strong and successful track record of designing leading edge networking semiconductors that provide innovative solutions to address significant infrastructure challenges," according to a post on the Cisco blog Wednesday signed by Rob Salvagno, Cisco Systems Inc. (Nasdaq: CSCO)'s head of corporate development and investments.

Cisco will pay cash and assumed equity awards for Leaba, along with additional retention-based incentives, Salvagno writes. The Leaba team will report to Cisco's Core Hardware Group led by senior VP Ravi Cherukuri.

Stealthy Leaba has raised $16 million since its 2014 founding by chief executive Eyal Dagan and chief technology officer Ofer Iny, who sold Dune Networks to Broadcom in 2009 for about $200 million, according to Reuters.

Leaba has 45 employees and is based in the Israeli coastal town of Caesarea. Investors include Pitango Venture Capital of Israel and Bessemer Venture Partners, Reuters says.

The company is young and doesn't have a fully developed product, making the deal "an acquisition of a talented team working on something of strategic interest to Cisco," a source told Reuters.

The deal follows an announcement this week that Cisco will acquire CliQr, a hybrid cloud automation company, for $260 million. (See Cisco Buys CliQr for $260M in Hybrid Cloud Push.)

It's been a busy week for Cisco, which also introduced a sweeping virtualized networking strategy for the enterprise, as well as its entry into the hyperconverged data center market and upgrades to its Nexus switch line. (See Cisco Rewrites Enterprise Networking DNA in 'Monumental Shift' and Cisco Storms the Hyperconverged Data Center.)

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected]

jeepman 3/3/2016 | 2:00:58 PM
Way too much money... $320M for a company with only 45 employees and no product? This works out to something like $7.1M per employee. First the founders snookered Broadcom by selling Dune (their prior company) to Broadcom for $200M. But at least they had some product designs there. Seems to me Cisco is asleep at the wheel on this one, and/or in 'panic' mode to rebuild a decimated engineering organization by throwing (lots of) money at the problem. Maybe the massive layoffs in engineering a couple of years ago is coming back to bite them.
danielcawrey 3/3/2016 | 11:04:22 AM
Great Move This is just another intelligent move by Cisco. I'm amazed at the company's ability to sniff out good deals, and then excute on them.

Really, what other technology company is able to pull off such M&A deals with relative ease? I cannot think of another organization. 
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