Cisco Acquires Scientific-Atlanta
SAN JOSE, Calif. & LAWRENCEVILLE, Ga. - Nov. 21, 2005 - Cisco Systems, Inc., and Scientific-Atlanta, Inc., today announced a definitive agreement for Cisco to acquire Scientific-Atlanta. Scientific-Atlanta is a leading global provider of set-top boxes, end-to-end video distribution networks and video system integration. The combined entity creates a world class, end-to-end triple play solution for carrier networks and the digital home. In addition, upon closure, the market opportunities represented by this acquisition will become part of Cisco's Advanced Technology portfolio.
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 this 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.
"Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," said John Chambers, president and chief executive officer of Cisco Systems. "The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and 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."
Chambers continued, "As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco's leadership position across the entire networked digital home."
"We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers and our employees," said Jim McDonald, chairman, chief executive officer 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."
Scientific-Atlanta has platforms and technologies that enable scaling to millions of subscribers quickly and easily. This, along with the Cisco IP Next Generation Network architecture, will offer providers an open platform for service differentiation, allowing them to move beyond video/IPTV to develop and deliver a variety of integrated media services in the connected home.
Following the close of the transaction, Scientific-Atlanta will become a division of the Routing and Service Provider Technology Group under the leadership of Cisco Senior Vice President Mike Volpi. Jim McDonald will report directly to Mr. Volpi.
Prior to the close, Cisco and Scientific-Atlanta will operate as separate businesses and will continue to work with their existing partners. Following the close of the transaction, Cisco is committed to retaining the relationships and go-to-market strategies that both companies have developed.
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.About Cisco Systems
Cisco Systems, Inc. (NASDAQ:CSCO) is the worldwide leader in networking for the Internet. Information on Cisco can be found at http://www.cisco.com . For ongoing news, please go to http://newsroom.cisco.com .
Scientific-Atlanta is a leading supplier of digital content distribution systems, transmission networks for broadband access to the home, digital interactive set-tops and subscriber systems designed for video, high-speed Internet and voice over IP (VoIP) networks, and worldwide customer service and support.
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