Cisco Buys Starent for $2.9B in Mobile Push

Networking giant Cisco is aiming to up its mobile broadband Internet offerings with the $2.9 billion acquisition of Starent Networks.

Through a deal announced today, Cisco (NASDAQ: CSCO) will $35 per share in cash for each share of Starent (NASDAQ: STAR), while assuming outstanding equity awards for the company, a major supplier of IP-based mobile infrastructure.

Following its expected close in the first half of 2010, the acquisition will give Cisco a leg up in offering mobile infrastructure solutions to wireless carriers — helping it cash in on booming interest in smartphones and mobile data. Cisco said that its research has shown that global mobile data traffic is expected to more than double every year through 2013.

“We are very pleased that Starent Networks will be joining the Cisco team, and we believe their products and engineering talent will greatly benefit our service provider customers as they build out their mobile Internet offerings,” John Chambers, Cisco’s chairman and CEO, said in a statement.

In particular, Starent offers gateways that link 2G, 3G and WiMAX or LTE radios to IP networks. It also provides applications and the network technology for VoIP, mobile video and other wireless broadband applications. Customers include Verizon Wireless, Sprint, and Vodafone.

“Cisco and Starent Networks share a common vision and bring complementary technologies designed to accelerate the transition to the Mobile Internet, where the network is the platform for Service Providers to launch, deliver and monetize the next generation of mobile multimedia applications and services,” Pankaj Patel, Cisco’s senior vice president and general manager for its service provider business, said in a statement.

Following the deal’s close, Starent will become Cisco’s Mobile Internet Technology Group within its Service Provider Business unit, where it will be led by Starent’s current president and CEO, Ashraf Dahod.

The acquisition is the latest big-budget buy by Cisco, which early this month snapped up video conferencing player Tandberg in a deal worth $3 billion.

By mid-morning, shares of Cisco were trading up 0.87 percent on the news, to $23.99. Shares of Starent were up 17.57 percent, trading at $34.13.