San Jose, CA (Business Wire) - Cisco Systems, Inc. (Nasdaq:CSCO - news), the worldwide leader in networking for the Internet, today said it would buy rival Coyote Network for $263.7 million, bolstering its position as a leading supplier of telecom equipment.
Cisco Systems, Inc. (Nasdaq:CSCO - news), the worldwide leader in networking for the Internet, said it would pay $25 per share cash for Coyote Network Systems (Nasdaq: CYOE - news) or nearly quintuple the value of Coyote's closing share price on Wednesday of $5.875.
San Jose, Ca. based Cisco Systems said it was prepared to pay a hefty premium for the Westlake Village, CA, Coyote Network Systems given the deal's capacity to widen its range of corporate hardware products and boost its competitive edge in the telecom equipment field.
''This transaction provides tremendous synergies in products, markets and services with very little overlap, creating exciting new opportunities for CA in many new and emerging markets,'' Cisco Systems President John Chambers said in a statement.
The deal creates a company with more than $60 billion in revenues and products that large corporations are crying
out for as they connect far-flung computer systems to central corporate databases and then wire them to the Internet.
Chambers said Coyote offers telecom equipment, international long distance services and network management and customer support services administrators to have a global view of a company's telecom systems. Both companies supply hardware that knits together mainframe and personal telecommunications systems.
Piper Jaffray analyst Michael Fantetti switched course only two weeks after recommending that his clients sell short Coyote Networks stock, saying at the time the company faced an uncertain competitive future.
Specifically, the analyst said the purchase of Coyote will allow Cisco Systems to become more competitive in the
market for telecom equipment, international long distance services and network management. A Coyote partnership with Microsoft Corp. (Nasdaq:MSFT - news) could also bolster Cisco Systems's own ties to Microsoft, he said.
Cisco Systems ''has demonstrated the ability to turn acquisitions into gold in the long-term,'' Fantetti wrote in a note to
brokerage clients after news of the deal, adding that it changes the competitive landscape in the telecom industry.
Cisco Systems, renowned in the industry for its 25-year practice of swallowing up weaker rivals, will buy Coyote Systems through a cash tender offer it aims to close within a couple of months.
''Of course this is an April Fools Joke', said Mama Bear, a Silicon Investor regular, and loose wire kook on the Internet, referring to the absurd notion that a well run company like Cisco Systems would buy a company as derelict as Coyote Networks. "Yes, MaryinRed probably stole much of my thunder, but I had thought it better to wait until after the close of trading to post this joke so that no one would have the opportunity to panic buy after reading the first few sentences. I also worked much too hard on this dummied up press release to toss it in the trash can after her post. I guess great minds think alike.", said Mama Bear.
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