By Saabira Chaudhuri
Cisco Systems Inc. /zigman2/quotes/209509471/composite CSCO +0.43% has agreed to buy cybersecurity firm Sourcefire for $2.7 billion, a move that will bolster the technology giant's security offerings.
The purchase continues a string of relatively small acquisitions by the San Jose, Calif., company, which is trying to evolve into a less hardware-intensive information-technology provider as growth from its traditional network equipment business slows.
Columbia, M.D., based Sourcefire offers products like intrusion prevention systems, firewalls, and malware protection.
Under the terms of the agreement, Cisco will pay $76 a share in cash for each Sourcefire share, a 29% premium to Monday's close. The purchase price also includes retention-based incentives.
"Sourcefire aligns well with Cisco's future vision for security and supports the key pillars of our security strategy," said Hilton Romanski, vice president of corporate development at Cisco. "Through our shared view of the critical role the network must play in cybersecurity and threat defense, we have a unique opportunity to deliver the most comprehensive approach to security in the market."
The deal is expected to close in the second half of this year. Cisco expects the deal to slightly hurt adjusted earnings in fiscal 2014.
Sourcefire was founded in 2001 and went public in 2007. For 2012, Sourcefire reported revenue of $223.1 million, an increase of 35% from the year earlier.
The move comes roughly a month after Cisco agreed to buy privately held database integrator Composite Software Inc. for $180 million, a bid to expand its growing collection of software and services.
Shares of SourceFire, which were halted premarket, closed Monday at $59.08, while those of Cisco were up by five cents to $25.77.
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