Reports: Cisco Closing in on Deal to Buy BroadSoft

Cisco Systems, the largest networking gear maker in the world, is near to signing a deal to acquire telecommunications software maker BroadSoft based in the U.S. for as much as $2 billion, said a person close to the situation late Sunday.

The deal, which arrives after a report back in August that said BroadSoft was looking into a sale, would further diversify Cisco from its routers and switches that have stagnated by giving it more of a foothold in selling communications software to large telecommunications companies.

If the negotiations are successfully completed, Cisco’s deal to purchase BroadSoft could be made public as soon as later on Monday, said reports.

Cisco has not made any public comment about the possible deal, and BroadSoft was not available for a comment on Sunday.

With the company’s traditional business of making routers and switches seeing declines in revenue, Cisco, as with other legacy tech companies, has placed its focus on areas of high-growth such as security, cloud computing and the Internet of Things.

The deal to buy BroadSoft would be the second major Cisco acquisition in 2017 following its acquisition of $3.7 billion for AppDynamics Inc. a privately held company, during March.

Shares of BroadSoft closed on Friday at $54.90 giving the business a $1.67 billion market capitalization.

BroadSoft is based in Gaithersburg, Maryland, and provides services and software that enable fixed-line, mobile and cable providers to give unified communications over internet protocol networks.

It historically has sold products to the largest telecommunications companies like AT&T and Verizon Communications, which then in turn resell the software to their clients.

Recently BroadSoft has attempted to revamp it complete business model in an attempt to sell to these customers directly, a move that would risk its relationships with telecommunications partners, said a just released report from an industry analyst.

P2 Capital Partners, the hedge fund based in New York, owned a stake of 4.6% in BroadSoft as of June 30. P2 often took on the part of being an activist shareholder and offered to acquire companies that it has made investments in.

Another shareholder at BroadSoft with a background in acquisitions is KKR, a buyout company, which is the 13th largest BroadSoft shareholder showed data from regulatory filings made by the company as of June 30.

Acquisitions have become common place in the tech world of late, as the high-growth areas are taking hold across the industry forcing companies to absorb other companies.

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