US-based technology firm Cisco Systems Inc. has announced it plans to acquire IIT-Kanpur and BITS Pilani alumni-founded, hyper-convergence firm Springpath Inc. for $320 million (Rs 2,052 crore).
The acquisition will involve cash and assumed equity awards, besides additional retention-based incentives, Cisco said in a press statement. It is expected to close the deal in the current fiscal year, following customary closing conditions and regulatory reviews.
This will be Cisco’s second big-ticket buyout of a company founded by Indian entrepreneurs. Earlier this year, it had agreed to acquire San Francisco-based application intelligence software company AppDynamics Inc. for about $3.7 billion. It was one of Cisco’s largest deals in the past few years.
Sunnyvale, California-based Springpath, which was founded by former VMware executives Mallik Mahalingam and Krishna Yadappanavar in 2012, has developed a distributed file system, which is purpose-built for hyper-convergence and enables server-based storage systems. The company’s data platform eliminates the need for network storage and integrates into existing management tools to maximise operational efficiency.
According to Cisco, the acquisition will allow the networking giant in its efforts to deliver next-generation data centre innovations to its customers and grow its computing business.
“This acquisition is a meaningful addition to our data centre portfolio and aligns with our overall transition to providing more software-centric solutions. Springpath’s file system technology will deliver sustainable differentiation in this fast-growing segment,” said Rob Salvagno, vice-president, corporate business development, Cisco.
Springpath has been working alongside Cisco since early 2016 to launch HyperFlex, a fully-integrated hyper-converged infrastructure system. The acquisition is the culmination of a long-standing strategic relationship between the two companies, the press note added.
Mahalingam, a former research associate at IIT Kanpur with a B.S. in Computer Engineering from the University of Madras, had earlier worked with Hewlett Packard Enterprise and Netframe Systems.
Yadappanavar, who has a B.S. in Computer Science from BITS Pilani, had driven the backup and recovery product initiatives at Commvault and the NAS product line at EMC before going on his own. He had also been instrumental in the development of a distributed storage appliance at Veritas.
The company had earlier raised $34 million from a group of venture capital firms, including Sequoia Capital, New Enterprise Associates and Redpoint.
Cisco’s India bets
Cisco has been making venture-style investments in India. Until last year, it had invested in about 25 companies.
In March, Cisco said it would invest $100 million to fund startups and train 2.5 lakh students in India by 2020. The company has over 10,000 employees in India, and is looking at funding early- and growth-stage companies in Internet of Things and smart cities.
In November 2016, Cisco Investments had joined the Series B funding round of Pune- and San Francisco-based mobile customer relationship management firm Helpshift Inc.
In October 2015, it had taken over Bengaluru-based IT security firm Pawaa Software Pvt. Ltd for an undisclosed amount, to make its first acquisition in India.
Indian-origin US firm
A number of Indian-origin internet entrepreneurs have made it big in the US and has drawn investor interest in recent times.
Cloud security firm Netskope, which was founded by Sanjay Beri, the former India head of Juniper Networks, is one such success story. The company had recently raised $100-million in a Series E round from Lightspeed Venture Partners and Accel Partners, among others. According to Funderbeam, the company had a post-money valuation of $1.25 billion, and became the newest member of the unicorn club in the US. A unicorn is a company valued at more than one billion dollars.
Chicago-based health-tech company Outcome Health, which was founded by two Indian American entrepreneurs Rishi Shah and Shradha Agarwal, had recently raised $500 million at a valuation of $5.5 billion.
Earlier this month, US-based biotech company Roivant Sciences, which was founded by Indian-origin entrepreneur Vivek Ramaswamy, had raised $1.1 billion in around led by SoftBank.
Cloud computing firm Nutanix, which commands a market cap of $4.3 billion had raised over $350 million in venture funding before making its Nasdaq debut in September 2016, beating market expectations to hit $5 billion in valuation. The company was founded by IIT-Kanpur alumnus Dheeraj Pandey.
Nimble Storage, an enterprise flash storage firm founded by Indian-origin duo Varun Mehta and Umesh Maheshwari in 2008, had rung the New York Stock Exchange bell as early as December 2013. The stock had soared on its Wall Street debut, and it had hit a market cap of over $2.5 billion. In March, Hewlett Packard Enterprise Co. made an offer to buy it for $1 billion in an all-cash deal.
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