May 30, 2007, 12:31 AM — Cisco Systems Inc. has completed its acquisition of WebEx Communications Inc., entering the online collaboration services business through a US$3.2 billion deal, the company announced Tuesday.
Cisco will maintain WebEx's current business model of selling subscriptions for a Web-based service to enterprises that don't want to buy or build a collaboration system of their own, especially small and medium-size organizations. The Santa Clara, California, company is now a wholly owned subsidiary of Cisco, which plans to retain all its employees, said Cisco spokesman John Noh.
The acquisition, announced March 15, further extends a networking equipment giant that is increasingly positioning itself as a software and services company. It followed buyouts of two social-networking companies, Five Across Inc. and Utah Street Networks Inc., and all the technologies will complement each other, Chief Development Officer Charles Giancarlo said in March.
The WebEx service lets companies share presentations, applications and other data online, either asynchronously or in real-time sessions. The buyout will help Cisco compete against Microsoft Corp. and other vendors in collaboration and communication, and WebEx technology could also enhance Cisco's Unified Communications portfolio, according to Giancarlo. WebEx also offers a suite of productivity applications under the WebOffice brand, but Cisco doesn't plan to compete against desktop application suites such as Microsoft Corp.'s Office or Google Inc.'s Google Apps, he said.
The deal closed as expected in Cisco's fiscal fourth quarter. It was the first deal the company has made through a tender offer, in which the would-be acquirer publicly invites shareholders to sell their shares at a certain price at a given time, Cisco's Noh said. More than 90 percent of WebEx shares were tendered. A tender offer generally can be finished more quickly than other types of deals, such as cash purchases and share swaps, and makes it easier to offer attractive terms to employees in order to keep them on board, he said.