A Cisco office is pictured in San Diego, California

Cisco to buy cloud networking specialists Meraki for �750m

Cisco Systems has said it will buy cloud networking company Meraki for £750m in cash.

Networking equipment company Cisco said the acquisition of Meraki, which was founded in 2006 by members of MIT's Laboratory for Computer Science, is expected to close in the second quarter of Cisco's 2013 fiscal year and is subject to regulatory approval.

Cisco's second quarter runs until the end of January.

Meraki – funded by Sequoia Capital and Google – offers Wi-Fi technology, switching, security and mobile device management from the cloud with a focus on mid-sized businesses.

"This is a very logical move for Cisco," said ZK research analyst Zeus Kerravala.

He said the deal will allow Cisco to offer alternative solutions to traditional Wi-Fi deployment models like smaller competitors, such as Aruba Networks and Ruckus Wireless, which debuted last week.

"Cisco didn't really have anything to counter that before," Kerravala noted.

Meraki's chief executive Sanjit Biswas said in a letter to employees posted on the company website that Cisco had approached the company several weeks ago.

The company's founders had at first rejected the offer in favour of continuing Meraki's strategy aimed at an initial public listing.

"After several weeks of consideration, we decided late last week that joining Cisco was the right path for Meraki," Biswas said.

He also said that Meraki had achieved a $100m bookings run rate, grown to 330 employees and had a positive cash flow.

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