Cisco to buy WebEx for $3.2bn

Cisco is to bolster its web- and video-conferencing capabilities after agreeing to pay $3.2bn for on-demand collaboration software specialist WebEx.

Cisco said the deal would complement its existing web conferencing portfolio and provide it with a route into the small and medium business market.

The deal has been approved by both companies and is now subject to shareholder and regulatory approval. Cisco said the deal is expected to close during the fourth quarter.

Charles Giancarlo, chief development officer at Cisco said the acquisition of WebEx - which provides a hosted rather than proprietary web conferencing platform - would help the company better meet the growing demand for online collaboration tools from a wide range of different companies and users.

"Cisco believes the network is a platform for all forms of communications and collaboration, and WebEx’s technology and services portfolio complement Cisco’s leadership in the Unified Communications and collaboration market, while providing Cisco with a new and unique business model to expand its presence in the fast-growing SMB market," Giancarlo said.

Chris Harris-Jones of analyst Ovum said the deal would surprise many people but would extend Cisco's portfolio. "There is little overlap between WebEx and what Cisco does in collaboration tools," he said. "It also significantly bolsters Cisco's telco offering. They are already strong with voice over IP [VoIP] so adding one of the most widely used suites for doing presentations and so on over the web makes a lot of sense."

Cisco confirmed that it plans to preserve WebEx's subscription based services strategy, which it said had been critical to the company’s popularity amongst mid-market customers.

The deal is a further endorsement of the fast growing web- and video-conferencing market, which has prospered in recent years as broadband has become ubiquitous and firms have become increasingly concerned about financial and environmental cost of corporate travel.