Cisco is paying $3bn for Norwegian video conferencing specialist Tandberg.
The cash offer of 153.5 Norwegian Kroner for each Tandberg share represents a 25 per cent premium on the three month average share price. It has been unanimously accepted by Tandberg's board and is expected to close in the first half of next year.
Cisco said Tandberg products would be added to its collaboration products to improve how businesses communicate and share information.
Once the deal goes through, Tandberg's chief exec Fredrik Halvorsen will run the new TelePresence Technology Group, reporting to Marthin De Beer, senior VP of Cisco's Emerging Technologies Group.
Cisco's chief exec John Chambers said the two firms had very similar cultures and a "shared vision" of the future of business communications.
Video conferencing is one of several markets Cisco has marked out to make its own as it moves away from flogging routers. Cisco sells its own video conference products under the TelePresence brand. For companies unwilling to spend hundreds of thousands of pounds fitting out meeting rooms, Indian firm Tata will rent you such a space for a few hundred quid an hour.
Of course Cisco benefits from the direct sale and from related networking sales required by moving the data around the world.
Along with collaboration products Cisco is also going after the home entertainment operating system market, home electronics, blade servers and storage products.
Two years ago Cisco spent $3bn on WebEx which offers ways to share presentations and PowerPoint slides. Presumably this technology can be cross-sold with Tandberg's video conferencing bundles.
Tandberg has about 1,500 staff worldwide, with development centres in Norway and the UK. ®