In a move to boost its network security services Cisco Systems Inc. will pay $2.7 billion to pick up cyber security software provider Sourcefire Inc.
Cisco has lost market share in network security over the past few years to smaller, more innovative rivals such as Juniper Networks Inc, Check Point Software Technologies, and Palo Alto Networks Inc.
It fell behind in Web applications, social media and video streaming which all call for more complex security protection than traditional firewalls provide.
This pact removes a key competitor from the market, but gives a big boost to Cisco’s position.
It would also creates a larger competitor in the network security industry that could leverage its size to take advantage of the market. Sourcefire will bring its real-time network awareness (RNA) and intrusion prevention system (IPS) technology to Cisco.
The network equipment company said the deal would likely close during the second half of 2013 and it expects the acquisition to be slightly dilutive to non-GAAP earnings in fiscal year 2014.