Networking major Cisco today said it will acquire video software and content security solutions provider NDS Group for about $5 billion.
Under the terms of the agreement, Cisco will pay about $5 billion, including the assumption of debt and retention-based incentives, to acquire all of the business and operations of NDS.
UK-based NDS, which has more than 5,000 employees, develops software for delivering media content to various devices, including TVs and set-top boxes.
The private company, owned by Permira Funds and Rupert Murdoch-led News Corp, has clients like Airtel DigitalTV and TataSky in India.
Acquiring NDS will broaden Cisco's opportunities in the service provider market, expanding its reach into emerging markets, such as China and India, where NDS has an established customer footprint, Cisco said in a statement.
Both Cisco and NDS have major presence in India.
"NDS has been a preferred choice for companies in India and that's a huge advantage. Coupled with that, the significant talent base that NDS has in India has its benefits," Cisco APJC Managing Director Corporate Development Joydeep Bose said but declined to comment on revenue contribution from India to NDS.
He, however, said emerging markets like India and China contributed 40% of NDS' revenues globally.
NDS' Bangalore facility opened in 2000 and now about 25% of its employees are based in India.
"This makes the Indian operation the second largest in the NDS global network, providing jobs and training to over 1600 staff," NDS India website showed.
Cisco said the acquisition of NDS will complement and accelerate the delivery of Videoscape, its platform that enables service providers and media companies to deliver entertainment experiences.
The acquisition has been approved by the boards of directors of both companies.
"Our strategy has always been driven by customer need and on capturing market transitions. Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetisation opportunities and service differentiation," Cisco Chairman and CEO John Chambers said.
The acquisition is expected to close during the second half of calendar year 2012, subject to customary closing conditions, including regulatory review in the United States and elsewhere.
The net impact to Cisco is expected to be accretive to EPS in the first full year on a non-GAAP basis.
Upon completion of the transaction, NDS' global operations, including sites in the UK, Israel, France, India and China, and its approximately 5,000 employees will join the Cisco Service Provider Video Technology Group (SPVTG), led by Senior Vice President and General Manager Jesper Andersen.
NDS Executive Chairman Abe Peled would be appointed Senior Vice President and Chief Strategist for Cisco's Video and Collaboration Group, of which SPVTG is a part.
Peled will report directly to Marthin De Beer, Senior Vice-President, Cisco Video and Collaboration Group.