San Jose, Calif. - Cisco Systems, Inc. yesterday announced it has signed a definitive agreement to acquire publicly-held Summa Four, Inc. of Manchester, N.H. for $116 million.
Summa Four is a maker of programmable switches for service provider networks. Cisco said Summa Four's switches will enable it to offer telephony applications to new and existing service providers, and extend them to a voice-over-IP infrastructure.
These switches are used today for basic call switching as well as delivering voice mail, calling card and voice activated dialing services.
With this acquisition, Cisco plans to provide application developers with an "open services environment" for writing software for circuit- and packet-switched networks.
Cisco said it intends to expand Summa Four's existing relationships with application developers and will help them to extend their service platforms to voice-over-IP networks. Carriers will be able to select from more than 50 application developers that have built a broad array of voice packages based on Summa Four's switches.
Summa Four was founded in 1976. The 210 employees led by Summa Four President and CEO Robert Degan will become part of Cisco's Network-to-User Business Unit headed by Vice President and General Manager Kevin Kennedy within Cisco's Service Provider line of business.
Under the terms of the acquisition, between 1 million and 1.4 million shares of Cisco common stock will be exchanged for all outstanding shares and options of Summa Four. Based upon Cisco's July 27, 1998 closing price of $97.50, the stock exchanged would have a value of approximately $116 million.
In connection with the acquisition, Cisco expects a one-time charge against after-tax earnings of between $.04 and $.09 per share for purchased in-process research and development expenses in the first half of fiscal 1999. The acquisition has been approved by the board of directors of each company and is subject to various closing conditions, including approval under the Hart-Scott-Rodino Antitrust Improvements Act and approval by Summa Four stockholders.
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