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Why Cisco Just Paid $300 Million for This Cloud Security Firm

June 28, 2016, 1:26 PM UTC

Cisco Systems moved to bolster its security unit on Tuesday, acquiring Massachusetts-based startup CloudLock for almost $300 million.

The company helps its corporate customers maintain the security of their operations that rely on outsourced cloud applications from Google, Salesforce, Workday, and other cloud providers.

The service essentially lets companies monitor their users and data that have migrated to the outside servers run by a plethora of the big tech companies. Each cloud provider offers security features, of course, but CloudLock seeks to lock down a customer’s entire effort across multiple services. For example, if a single user tried to log into two different cloud apps from two different geographic locations, CloudLock’s software could raise an alert.

CEO and co-founder Gil Zimmerman spent 20 years working at major tech companies EMC and Sun Microsystems before launching CloudLock. The company has raised $28 million from venture capital funds such as Bessemer Venture Partners, Cedar Fund, and Ascent Venture Partners, according to a report in BostonInno last year. Founded as Aprigo in 2007 and originally focused on storage analysis, the company changed its name and switched to the security market in 2011.

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Cisco said it expects the deal to close in its fiscal first quarter of 2017, which runs from August through October. The company will pay a total of $293 million in cash and equity awards, with additional incentive payments to retain CloudLock employees possible in the future.



The new unit will report to senior vice president David Goeckeler, who had overseen Cisco’s small but growing security business until a reshuffling several weeks ago put him in charge of the company’s massive network hardware business as well. Revenue at the security division jumped 17% to $482 million in the most recent quarter, though that represented just 4% of total revenue.

Shares of Cisco (CSCO), which have lost 3% over the past year, gained 1% in premarket trading after the CloudLock acquisition was announced.