WebEx: Shares Jump 22% on News of $3.2B Acquisition by Cisco

WebEx, a leader in on-demand collaboration applications (Internet teleconferencing), has agreed to a $2.9 billion (net of existing cash) cash acquisition by Cisco Systems. Its shares gained $10.18 (or 22%) to $56.38 yesterday, reaching an all-time high. In a press release, Cisco said it expects the deal to close in its fiscal Q4 ending in July, subject to domestic and international antitrust approval. The acquisition is expected to be neutral to its non-GAAP FY'08 earnings. WebEx's CEO Subrah Iyar commented that "Cisco and WebEx share a vision of web collaboration as a key to accelerating business processes and critical to durable competitive advantage." Dow Jones Newswires reports Iyar said WebEx controls a 65% share of the online collaborative market. Analysts reacted positively to the deal, although Cisco's shares lost 0.15% to $25.81 on the day. Cisco faces heightened competition in business communications from Microsoft, which recently announced beta versions (available later this month) of its Office Communications software.

Sources: Press release, CNET, Bloomberg, Dow Jones Newswires
Commentary: Cisco On the Acquisition Hunt: What Does it Hope to Accomplish? • Cisco to Acquire WebEx: Why I Love This Deal • Cisco's WebEx Acquisition Signals New Model Aimed At Microsoft
Stocks/ETFs to watch: Cisco Systems (CSCO), WebEx (WEBX). Competitors: Citrix Systems (CTXS), Microsoft (MSFT). ETFs: Internet Architecture HOLDRs (IAH), iShares Goldman Sachs Networking (IGN), Technology Select Sector SPDR (XLK)

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Comments

[Mr. Finance]

<b>Cisco - WebEx Acquisition was Management Influenced, Board Approved</b>

Board members of Cisco have weak connections to the board members of Web-Ex, although synergies do exist. However, the executives of these companies are strongly connected to one another. IntellectSpace's auto-generated Knowledge Map didn't reveal many significant common relationships between board members of Cisco and Web-Ex (see below), but it uncovered significant overlapping relationships among their executives. One possible explanation for why this merger came to fruition was because the executives of both firms found compelling rationale for the merger, and sought approval from their respective boards.


Following Knowledge Map shows that there are almost no common board connections:

To view an interactive vesion, follow the URL below (Only with Internet Explorers supported):

fn.intellectspace.com/...

The bottom line is that these two organizations will have inherently strong management synergies that will allow these teams to merge well, creating greater value for shareholders.


The following IntellectSpace Knowledge Map shows common executive synergies between Cisco and WebEx.

To view an interactive version of this Knowledge Map, follow this URL: fn.intellectspace.com/...