November 18, 2005 San Jose, CA and Lawrenceville, GA -- Cisco Systems today announced a definitive agreement to acquire Scientific-Atlanta, a global provider of set-top boxes, end-to-end video distribution networks, and video system integration. The companies say the combined entity will enable development of an end-to-end "triple play" platform for carrier networks and consumers.
According to a press release, under the terms of the agreement, Cisco will pay $43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options, for an aggregate purchase price of approximately $6.9 billion, or approximately $5.3 billion net of Scientific-Atlanta's existing cash balance.
The transaction will be accounted for in accordance with generally accepted accounting principles, and the acquisition of Scientific-Atlanta is expected to close in the third quarter of Cisco's fiscal year 2006. Cisco anticipates the transaction will be neutral to its FY2006 earnings, slightly accretive to its non-GAAP (pro forma) FY2007 earnings, and will be financed with a combination of cash and debt.
The acquisition has been approved by the board of directors of each company and is subject to various standard closing conditions, including approval under Hart Scott Rodino and similar laws outside the U.S. and by the shareholders of Scientific-Atlanta.
"The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks," remarks John Chambers, president and CEO of Cisco. "The addition of Scientific-Atlanta further extends Cisco's commitment to and leadership in the service provider market. Moreover, Cisco's international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity."
"We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers, and our employees," adds Jim McDonald, chairman, CEO, and president of Scientific-Atlanta. "The combined strengths and resources of our two companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might not have existed otherwise."
Following the close of the transaction, Scientific-Atlanta will become a division of Cisco's Routing and Service Provider Technology Group under the leadership of Cisco senior vice president Mike Volpi. Prior to the close, the two companies will operate as separate businesses and will continue to work with their existing partners.
Scientific-Atlanta was founded in 1951 and held its Initial Public Offering (IPO) on July 29, 1959. The company has more than 7500 employees. For FY2005, which ended July 1, 2005, Scientific-Atlanta reported revenues of $1.91 billion.