Cisco announced its intent to acquire privately held cloud networking company Meraki for $1.2 billion. San Francisco-based Meraki was founded in 2006 by MIT PhD candidates, and was funded by Sequoia Capital and Google.
Cisco (CSCO) will gain new cloud-based network offerings with the acquisition. Meraki’s wireless, switching, and security solutions, delivered on edge and branch networks will expand Cisco’s network offerings by providing scalable solutions for mid-market businesses. Meraki will also strengthen Cisco’s Unified Access platform, which seeks to unite wired and wireless networks, policy and management into one integrated network infrastructure.
“The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises," said Rob Soderbery, senior vice president, Cisco Enterprise Networking Group. "These companies have the same IT needs as larger organizations, but without the resources to integrate complex IT solutions. Meraki’s solution was built from the ground up optimized for cloud, with tremendous scale, and is already in use by thousands of customers to manage hundreds of thousands of devices.”
Meraki will anchor a new Cloud Networking Group at Cisco. Under the terms of the agreement, Cisco will pay approximately $1.2 billion in cash and retention-based incentives to acquire the entire business and operations of Meraki. Cisco listed talent retention and the strength of the team at Meraki as a key element of the acquisition. Sequoia Capital's Doug Leone has a blog post explaining how the three Meraki co-founders started and how their products and company evolved. Google saw Meraki's wi-fi product initially and liked it enough to buy 1,000 routers and invest in the company.
Cisco has had an active year in acquisitions, as it continues to build out enterprise networking strategies. Just last week Cisco acquired data center automation company Cloupia. Cloupia and the previous six acquisitions (vCider, ThinkSmart, Virtuata, Truviso, ClearAccess and NDS) were all aligned with Cisco's adoption of software-based business models.