Cisco will pay $5 billion (£3.2 billion) to buy NDS, the video encryption software company, from News Corporation and Permira in one of the largest deals in the technology sector this year.
NDS is based in Staines, Surrey, but was founded in Israel in 1988. It rose to prominence as a result of the rise of pay-television businesses such as BSkyB in the 1990s as it supplied the software to protect the video content being delivered via satellite or cable into homes.
NDS was acquired by its largest customer, News Corporation, parent company of The Times, in 1992 for a mere $15 million and was floated on Nasdaq during the tech boom at the turn of the century.
It was delisted in 2009 when Permira and News Corp took it private. It was due to be relisted last year to raise funds, but rumours of a sale have emerged in recent months and the sale to Cisco is the latest move in the consolidation of the security sector following the acquisitions of McAfee by Intel while Cisco acquired British company ScanSafe in 2009.
Cisco is highly acquisitive and has purchased a spate of companies in recent years. However, it has been tidying up its business over the past year as John Chambers, its exuberant chief executive, sought to improve the profitability of a company that was thought to have become too diverse. The NDS deal is the largest since Cisco acquired Scientific Atlanta in 2005.
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“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,” Mr Chambers said.
Dr Abe Peled, founder and executive of chairman of NDS, will become chief strategist for Cisco’s video unit.
Cisco shares were down 1.7 per cent, or 32 cents, at $19.86 on Nasdaq in early trading.