Cisco said it will acquire Broadsoft for US$1.9 billion as part of its continued software blitz, in a move that gives the networking giant a bigger piece of the unified communications market.
The blockbuster deal is Cisco's seventh acquisition this year, including its US$3.7 billion purchase of cloud application and business monitoring provider AppDynamics.
Several Cisco partners, who did not want to be identified, said the deal effectively makes Cisco a major competitor to partners who invested heavily in hosted voice practices. "Cisco is trying to eat our lunch," said the vice president of sales for a Cisco solution provider, noting the deal raises a channel conflict red flag. "Cisco needs to tell hosting providers like us how we are going to maintain our margins as they become our competition," he said.
The network leader is set to acquire Broadsoft for US$55 per share or about US$1.9 billion cash. The acquisition is expected to close during the first quarter of calendar year 2018.
"We believe that our combined offers, from Cisco's collaboration technology for enterprises to Broadsoft's suite for small and medium businesses delivered through service providers will give customers more choice and flexibility," said Rowan Trollope, senior vice president and general manager of Cisco's Applications Business Group, in a statement. "Cisco and Broadsoft will deliver a robust suite of collaboration capabilities across every market segment."
BroadSoft touts itself as the leader in cloud PBX, unified communications, team collaboration and contact centre solutions.
BroadSoft's cloud business applications and platforms are available through more than 450 service providers in 80 countries. The vendor currently has over 19 million business subscribers.
Both Cisco and Broadsoft stock slightly rose Monday morning, with Cisco up 0.70 percent to US$34.48 per share and Broadsoft up 1.53 percent to US$54.72.
Cisco said combining Broadsoft's open interface and standards-based cloud voice and contact centre solutions delivered through service provider partners with Cisco meetings, hardware and services portfolio will offer best-of-breed solutions for businesses of all sizes and deliver a full suite of collaboration capabilities.
"We chose Broadsoft as it provides a portfolio of cloud collaboration platforms and business applications, which strengthen our cloud investments and ability to deliver collaboration solutions to our global telecom provider customers," said Rob Salvagno, vice president of Cisco Corporate Development and Cisco Investments, in a blog post.
"Cisco and Broadsoft will provide a comprehensive SaaS portfolio of cloud-based unified communications, collaboration, and contact center software solutions and services for customers of all sizes."
BroadSoft employees will join Cisco’s Unified Communications Technology Group led by Tom Puorro, under the Applications Group led by Trollope.
Steven Burke contributed to this story.