Cisco buys Meraki for $1.2 billion

Networking giant Cisco has been snuffling through the catalogues and come up with a new cloud company which caught its eye.

Cisco is to buy networking company Meraki for $1.2 billion in cash as part of its cloud and networking strategy.

According to the BBCMeraki has been around since 2006 when it was created by members of MIT’s Laboratory for Computer Science. It is expected to be hanging in Cisco’s wardrobe by January if the regulators and other moths like the concept.

Meraki is not a normal cloud company. It sells wi-fi technology, switching, security and mobile device management from the cloud with a focus on mid-sized businesses. Meraki has a $100 million bookings run rate, grown to 330 employees and a positive cash flow.

The deal means that Cisco can provide alternatives to traditional wi-fi deployment models like smaller competitors. The likes of Aruba Networks and Ruckus Wireless should be a little worried to suddenly have a big shark like Cisco swimming around in their small pond.

In a letter posted on the company’s website, Meraki’s Chief Executive Sanjit Biswas said Cisco had approached the company several weeks ago.

Initially the company told Cisco to go forth and multiply, partly because the networking giant had bad breath, but mostly because the company wanted an IPO.

After several weeks of arm twisting, Meraki changed its mind.