Cisco snaps up Starent for premium price

Cisco Systems significantly elevated itself in the 4G world after announcing a deal to acquire Starent Networks for a whopping $2.9 billion, or $35 per share--representing a a nearly 20-percent premium on Starent's closing price on Monday of $29.03 per share.

The announcement comes less than two weeks after the service provider router giant said it would buy Tandberg, the video conferencing equipment manufacturer, for $3 billion.

Since Starent started in 2000, the company has picked up a handful of major customers, including Verizon Wireless, Sprint Nextel, Vodafone and Cox Communications. The company went public in 2007. In February, Verizon announced that Starent--along with Alcatel-Lucent and Ericsson--would be providing the enhanced packet core for its LTE network. Both Cisco and Starent have also supported WiMAX as well.

It appears Cisco had pinned its 4G hopes on its $330 million acquisition of WiMAX infrastructure Navini Networks in 2007. It scored a deal with Clearwire in May to provide the IP infrastructure for Clearwire's nationwide WiMAX rollout.

According to Technology Business Research, the Starent acquisition means "the company can now offer a more complete end to-end IP infrastructure solution, enabling carriers to more effectively manage and monetize the increased load placed on their networks by mobile applications."

Starent reported 2008 revenue of $254.1 million, up 74 percent from a year earlier. 

For more:
- see this NYT article [1]
- see this Bloomberg article [2]
- see this WSJ article [3] (sub. req.)

Related articles:
Cisco buys Tandberg for $3B [4]
Alcatel-Lucent, Ericsson win Verizon LTE deal [5]
Motorola teams with Starent for LTE core networking [6]
Clearwire turns to Cisco for IP core, WiMAX devices [7]
Starent wins Cox 3G contract [8]