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Cisco Catches Airespace for SMBs

Cisco Systems said it will purchase privately held Airespace to increase its wireless LAN (WLAN) product portfolio.

The deal, worth an estimated $450 million in stock and options, is expected to close by the end of April, following the usual government and shareholder review process.

As previously reported, Cisco has been spotted around town shopping for a company to help compliment its WLAN product family for small-to-medium-sized businesses. In San Jose, Calif.-based Airespace, it found WLAN controllers, access points, WLAN management and location software, and security capabilities, including intrusion detection systems.

A spokeswoman for Cisco said that Airespace will continue to offer and support its existing Cisco Structured Wireless-Aware Network framework (SWAN) and Airespace product lines as separate entities... at least in the short term.

The company did not say how the Airespace acquisition would impact its existing line of distributed access points known as Aironet.

After the transaction finalizes, Airespace CEO Brett Galloway, top executives and the majority of its 175 employees will join Cisco's Data Center, Switching and Wireless Technology Group, led by Senior Vice President Luca Cafiero.

"As part of our global systems approach to networking, we continually look for complementary technology that offers new value to our customers. Airespace is a strong technological and cultural fit with an outstanding team," Cafiero said in a statement.

The acquisition is quite a coup for Cisco, considering that it and its rivals Nortel Networks, Alcatel, and NEC all have relationships with Airespace, which was founded in July 2001.

Cisco also as managed to take out a rising star in the burgeoning WLAN market. While Cisco leads the enterprise market with 43 percent of sales, for the first time, Airespace broke into the top three, following Symbol, according to a report issued late last year by Synergy Research Group, which produces numbers tracking WLAN sales.

The purchase even gives Cisco additional patents, because Airespace's centralized WLAN architecture was designed from the ground up.

Shares of Cisco were selling at $18.98 per share, or 26 percent higher than its last close in after-hours trading.