Cisco’s second acquisition in the New Year is another big one.
The networking giant said Monday that it plans to pay $610 million for startup Viptela, which sells networking technology that lets companies connect their branch offices to corporate data centers.
Viptela, founded in 2012 by former Cisco (CSCO) engineers, has raised nearly $110 million in investment. The startup’s $75 million funding round in May, 2016 gave it a pre-money valuation of $825 million, according to the investment-tracking site Pitchbook.
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A Cisco spokesperson said that the company expects “the majority of Vitpela employees” to join Cisco and will “share more detail in the coming weeks.” Viptela has almost 120 employees, according to Pitchbook.
In January, Praveen Akkiraju, a 19-year Cisco veteran who was the senior vice president of its enterprise-networking group, became Viptela’s new CEO.
The acquisition comes as Cisco’s core switching and routing business has faced declines as more companies forgo buying data center hardware and instead are purchasing computing resources on demand from giants like Amazon Web Services (AMZN) and Microsoft (MSFT). To offset the declines, Cisco has been investing heavily in software through big acquisitions like AppDynamics and its $635 million purchase of security startup OpenDNS in 2015.
The acquisition gives Cisco a vendor that sells much of its technology through AWS, which could help it gain more customers that use cloud services instead of buying data center hardware. Nearly 90% of Viptela’s customers use a version of its networking technology that’s delivered through AWS, according a January article by industry trade publication SDX Central.
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Viptela’s competitors include other networking startups like CloudGenix and Affirmed Networks.
It’s unclear whether Cisco will keep the Viptela name. The Cisco spokesperson said “it’s too early yet to make this decision.”
The deal is expected to close in the second half of 2017.