Cisco to Acquire Pentacom for $118 Million, Gain SONET-Like Protection and Restoration Technology

Cisco Systems Inc.A-based <%=company%> plans to acquire privately-held Pentacom Ltd. (Herzliya, Israel). Pentacom is a provider of products implementing Spatial Reuse Protocol (SRP) that allows IP based metropolitan networks to offer the same protection and restoration benefits as SONET-based networks while doubling bandwidth efficiency. Pentacom's technology provides fiber management and hubbing for IP transport networks. This acquisition underscores Cisco's New World strategy to deliver end-to-end IP based solutions for service providers to deploy advanced data, voice and video services.

Under the terms of the agreement, Cisco common stock with an aggregate value of approximately $118 million will be exchanged for all outstanding shares and options of Pentacom. Cisco made an 11% minority investment in Pentacom in June 1999. In connection with the acquisition, Cisco expects a one-time write off of up to $0.01 per share for purchased in-process research and development expenses. The acquisition has been approved by the board of directors of each company and is expected to close in Q4 of Cisco's FY 2000. This transaction is subject to various closing conditions.

Edited by Kristin Keiser