No Optical Illusion: Cisco M&A Continues With Lightwire Buy

Cisco will acquire Lightwire, a specialist in advanced optical interconnect technology designed for high-speed networking uses. Cisco plans to use the technology in its optical networking portfolio to enable fast, efficient delivery of demanding applications such as video and cloud services, the company said Friday.

Cisco will pay about $271 million in cash and retention-based incentives in exchange for all shares of Allentown, Pa.-based Lightwire. Lightwire's employees will become part of Cisco's Transceiver Modules Group Business Unit and Supply Chain Operations Group following the close of the deal, which is expected during Cisco's current quarter.

Lightwire's expertise is in CMOS photonics technology and how to package it. It is known for small and scalable products that don't consume much power -- attributes that, according to Cisco, give switches, routers and optical transport systems higher-density optical connectivity at a lower cost to service provider customers.

[Related: 10 Past Cisco Acquisitions Considered ]

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Founded in 2002, Lightwire is backed by New Science Ventures, Artiman Ventures and Novitas Capital. Ameesh Divatia, Lightwire's president and CEO, was Cisco's chief product strategist for optical transport products from 1998 to 2001.

Ned Hooper, Cisco's chief strategy officer, said the Lightwire acquisition complements Cisco's 2010 pickup of CoreOptics, which was also an optical networking acquisition and brought Cisco digital signal processing tools.

"Acquiring Lightwire's advanced technology exemplifies Cisco's build, buy and partner innovation model and supports our focus on driving market leadership in core networking, one of Cisco's five strategic priorities," Hooper said in a statement.

Cisco traditionally has been one of the industry's most active acquirers, though it largely curtailed M&A in 2011 during a lengthy, companywide restructuring effort. Cisco Chairman and CEO John Chambers said during Cisco's second-quarter earnings call this month that Cisco's M&A pace would start to pick up again.

"We expect to be more active with acquisitions in the quarters to come," Chambers said.