The Cloud

Cisco Adds HCS Capability With BroadSoft Buy

The $1.9 billion deal will give Cisco cloud-delivered communication tools to supplement its on-premise offerings.
Matthew HellerOctober 23, 2017

Cisco Systems said Monday it will acquire software company BroadSoft for $1.9 billion, giving it tools for the enterprise collaboration and communications market that supplement its WebEx and Spark offerings.

Cisco currently offers HCS (Hosted Collaboration Solutions) on premise, meaning the software is installed on devices. In BroadSoft, it acquires an HCS company that delivers its products over the cloud.

The BroadSoft software and services enable mobile, fixed-line and cable service providers to offer unified communications and contact center solutions over their internet protocol networks. Its 450 customers include large telecom companies such as Verizon Communications and AT&T, which then resell the software to their business customers.

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Cisco will pay $55 per share for BroadSoft, representing a premium of 2% to Friday’s closing share price and a premium of more than 25% to the undisturbed price on Aug. 30.

“Together, Cisco and BroadSoft will deliver a robust suite of collaboration capabilities across every market segment,” Rowan Trollope, general manager of Cisco’s Applications Business Group, said in a news release. “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.”

BroadSoft was founded in 1998 and went public in 2010 after raising over $77 million. According to TechCrunch, the acquisition is in many ways a continuation of Cisco’s purchase a decade ago of WebEx, which was designed to “jumpstart its position in the enterprise collaboration and communications market.”

“BroadSoft’s portfolio is complementary to our existing on premises and enterprise-centric Hosted Collaboration Solutions (HCS), as well as Cisco’s overall cloud investment strategy,” Rob Salvagno, VP of corporate business development at Cisco, said in a blog post.

The deal is Cisco’s second major acquisition this year following a $3.7 billion deal for privately held AppDynamics in March.

“Broadsoft is a nice fit for Cisco as its products and strategy targets SMEs whereas Cisco targeted enterprises,” Alan Pelz-Sharpe, founder of Deep-Analysis, told TechCrunch. “Together they cover a much bigger addressable market and look like a pretty sensible matchup.”