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Friday July 27 6:43 PM ET

Cisco Systems to Acquire Allegro

SAN JOSE, Calif. (AP) – Cisco Systems Inc. (NasdaqNM:CSCO – news) announced Friday it has agreed to acquire Allegro Systems Inc., a developer of Internet security solutions, in a stock deal valued at up to $181 million.

The agreement marks Cisco’s second acquisition in less than month.

Privately held Allegro and its 39 employees develop products that accelerate and improve the functionality of secure connections through the Internet, also known as Virtual Private Networks.

Cisco officials said Allegro’s technology will enhance Cisco’s existing VPN offerings, which are increasingly used by companies to safely connect remote offices and telecommuters to corporate networks.

The purchase is expected to close in the first quarter of Cisco’s fiscal 2002, which starts in August. Both companies’ boards have approved the deal, but it is subject to various closing conditions and regulatory review.

Cisco said it will take a one-time charge against its earnings of no more than 1 cent per share. The company did not specify when the charge would be taken.

The deal marks the second purchase for Cisco in less than a month after a long drought that coincided with a steep downturn in the communications industry.

In early July, Cisco said it agreed to pay $150 million in stock for AuroraNetics, which develops silicon technology for metropolitan fiber networks. It was Cisco’s first acquisition deal in seven months.

Between 1993 and December, Cisco acquired 71 companies. The buying ended as Cisco’s high-flying business crashed, its stock fell 80 percent. The company also cut 8,500 jobs.

Cisco shares fell 32 cents, to close at $19.06, in trading Friday on the Nasdaq Stock Market.

On the Net:

Cisco Systems: http://www.cisco.com

Allegro Systems: http://www.allegrosys.com

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