Cisco Completes $2.9 Billion Starent Deal

Cisco Systems has completed its $2.9 billion acquisition of mobile infrastructure vendor Starent Networks, which will become a key part of Cisco’s new Mobile Internet Technology Group.

Cisco announced the completion of the deal Dec. 18, a day after the Department of Justice and Federal Trade Commission gave their OK to the acquisition, and a week after Starent shareholders gave their approval.

Cisco officials see Starent as a key building block as they look to gain traction in the rapidly growing mobile Internet space. Cisco is predicting that global mobile data traffic will more than double every year through 2013, fueled by the rapid sales of Web-connected smartphones and other devices.

The growth is putting demand on service providers, who are looking to upgrade their infrastructure to meeting the increasing demand, according to Cisco.

Starent’s products offer service providers everything from core network capabilities to services to the ability to manage connections between a mobile operator’s network to any 2.5G, 3G and 4G radio network. They also offer access through a number of standards, such as WiMax and CDMA2000.

Starent President and CEO Ashraf Daho will now become senior vice president and general manager of the new Mobile Internet Technology Group, according to Cisco.

Cisco, which has been on a buying spree in 2009 as it looks to grow into almost three dozen new “market adjacencies,” is still waiting to close the $3.4 billion deal for Norwegian video conferencing equipment maker Tandberg, which will be a key part of Cisco’s larger collaboration business.

Cisco sees the collaboration space as a $34 billion opportunity, and video will play a key role in that space as it grows.

Cisco initially offered $3 billion for Tandberg Oct. 1, about two weeks before making the Starent bid. After a number of Tandberg shareholders balked at the price, Cisco upped the offer to $3.4 billion, and earlier this month officials said they had gained control of more than the desired 90 percent of Tandberg shares to move forward with the deal.