Cisco Systems, Inc. (NASDAQ:CSCO) has tabled a $320 million acquisition bid for software start-up Springpath. The acquisition ramps up the company’s investment spree as it continues to explore ways of pursuing growth opportunities in the cloud and data centers business. The $320 million cash transaction should close later this year.
Cisco $320 Million Bet
Cisco plans to use Springpath to bolster its data center portfolio as well as grow its computing business. The software startup is to be integrated into the tech giant’s Computing System Product Group led by Liz Centoni.
"This acquisition is a meaningful addition to our data center portfolio and aligns with our overall transition to providing more software-centric solutions. Springpath’s file system technology was built specifically for hyperconvergence," said Rob Salvagno, Cisco's VP of business development.
Springpath is an early partner in the hyperconverged-systems market. The company develops and sells software used to run server-based data storage systems within the struggling server market. The International Data Corporation expects the hyperconverged infrastructure system market to present a $6 billion market opportunity by 2020.
Springpath software is designed to convert standard servers into a pool of computing and storage resources that allow users to eliminate the need for hardware on each activity. The company’s software is also designed to optimize the use of hardware in data centers.
Cisco’s Acquisition Spree
Cisco has embarked on an acquisition spree this year as it looks to affirm its position in the data center and cloud business. In May, the company acquired MindMeld, a startup focused on the development of artificial intelligence platform for enterprise for $125 million. The company has also inked a $610 million deal for SD-WAN startup Viptela as well as a $3.7 billion deal for AppDynamics.
The pursuit of growth opportunities on the cloud and data centers comes at a time when Cisco is grappling with a slowdown in sales in its switching products and networking hardware business. The company has made moves to become a software Company in a bid to reduce reliance on hardware sales.
Cisco was up by 1.02% in Monday’s trading session to end the day at $30.68 a share.
