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Cisco Snaps Up Scientific-Atlanta

The IT world took one step closer to converging with the broadcast market with this week's announcement that networking equipment giant Cisco Systems is acquiring Scientific-Atlanta for $6.9 billion.

According to the deal, Cisco will pay $43 per share in cash in exchange for each share of S-A, and assume outstanding options. S-A, along with Motorola, are the two largest suppliers of set-top-boxes to the cable market.

"Video entertainment is becoming increasingly digital and on demand, with rapid global adoption of high-definition television and digital video recording driving the migration to IP-centric platforms," said John Chambers, president and CEO of Cisco Systems.

Both heads of the companies announcing the deal in a press conference agreed that this acquisition marks the beginning of a business plan to deliver integrated solutions so that customers have fewer vendors and easier implementation of new technologies.

"The markets we serve have been changing rapidly and we believe the rate of change will accelerate," said S-A CEO Jim McDonald. "Technology advances will make new products available, our customers' markets will consolidate and the bundling of many services including video will become increasingly important to our customers."

When the deal closes, S-A will become a division of Cisco's Routing and Server Technology group lead by Mike Volpi, Cisco senior vice president.

S-A, founded in 1951, has 7,500 employees. For FY2005, which ended July 1, 2005, the company reported revenues of $1.91 billion. S-A's customer list includes Time Warner Inc.'s cable unit, Cablevision Systems Inc., Comcast Corp and SBC.