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Cisco buys network switch maker for $5.7 billion

With the acquisition of ArrowPoint Communications, the networking giant is hoping to expand its portfolio of products to better handle the increasing amount of voice, video and data transmitted across the Web.

Cisco Systems today acquired ArrowPoint Communications, a maker of network switches, for about $5.7 billion in stock.

With the acquisition, the networking giant is hoping to expand its portfolio of products to better handle the increasing amount of voice, video and data transmitted across the Web. ArrowPoint, based in Acton, Mass., produces switches that are designed to make the delivery of that Web content more efficient.

The buy is the latest in its ongoing shopping spree. The company recently has scooped up several companies, including SightPath for $800 million, as it aims to provide integrated data, voice and video networks.

"This is consistent with Cisco's ongoing strategy of acquiring to fill in certain products where they either don't have their own product or they have one that is behind the market," said Michael Cristinziano, an analyst at investment firm Gerard Klaurer Mattison.

Under the terms of the purchase, Cisco will exchange 2.1218 shares of common stock for every outstanding share and option of ArrowPoint. The deal is based on the networking giant's closing price yesterday of $63.63. The acquisition will be accounted for as a pooling of interests and is expected to close in the fourth quarter of Cisco's fiscal year 2000, the company said.

While the purchase has been approved by the boards of directors of both companies, it is subject to various closing conditions, including antitrust regulatory approval.

ArrowPoint, founded in 1997, has 337 employees. It is led by chief executive Cheng Wu and will join the public carrier Internet protocol group at Cisco.

ArrowPoint provides a content switching platform using software- and hardware-based architecture. That setup allows it to direct network traffic and content based on what Web surfers are requesting and the frequency of those requests.