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Cisco to Acquire NetSolve for $128M

Cisco Systems has inked a deal to acquire remote network management services provider NetSolve , the company said Thursday.

The purchase, worth an estimated $128 million -- or $11 per share for all outstanding shares -- would let San Jose, Calif.-based Cisco and its channel partners offer real-time monitoring of Cisco products running advanced IP services, such as Voice over IP and security.

Once the transaction is complete, NetSolve will eventually become a part of Cisco's Customer Advocacy Group. NetSolve President and CEO David Hood is expected to stay on. He and his team will report to Cisco Senior Vice President Wim Elfrink.

"As more businesses deploy secure converged networks with data, voice and video applications, creating and maintaining a healthy network infrastructure is essential to the successful deployment and operation of IP-based technologies," Elfrink said in a statement.

Austin, Texas-based NetSolve markets its offerings with the ProWatch brand name. The company's core services include the monitoring and management of IP communications networks, security software and devices, WANs and LANs. In addition, NetSolve offers a secure, Web-based portal to give customers and partners real-time visibility of their IT infrastructure. The company did not say whether ProWatch would continue as a separate brand or if it would merge with Cisco's CallManage product family.

NetSolve was founded in 1987, went public in 1999 and has 292 employees. The company competes fiercely with systems integrator EDS but has managed to eke out about 850 clients, including several midsize and large U.S.-based corporations, as well as services in 75 countries. Similar to Cisco, NetSolve sells directly to customers, as well as through channel partners like AT&T .

In a show of support for those customers, Cisco said it will extend the NetSolve services and technology to specialized channel partners via a resale model, a wholesale ASP model or its Advanced Technology Partner program.

"With the acquisition of NetSolve, Cisco gains an experienced team, proven process and intellectual property, providing the foundation to cost-effectively enable our channel partners to accelerate the adoption of remote network and IT infrastructure management services," Paul Mountford, a senior vice president with Cisco Worldwide Channels, said in a statement. "This is another important step in Cisco's commitment to help grow our partners' services practice revenue and overall profitability while adding value to the secure, converged networks of our mutual customers."

While the boards of both companies have given the green light to the acquisition, the transaction is expected to close in the second quarter of Cisco's fiscal year 2005 pending shareholder and regulatory approval.