Cisco intends to acquire Flip-Video creator

Cisco Systems Inc. intends to acquire privately-held Pure Digital Technologies Inc. The San Francisco-based creator of the Flip Video brand is a pioneer in developing consumer-friendly video solutions.

"The acquisition of Pure Digital is key to Cisco's strategy to expand our momentum in the media-enabled home and to capture the consumer market transition to visual networking," said Ned Hooper, senior VP of Cisco's corporate development and consumer groups. "Pure Digital has revolutionized the way people capture and share video with Flip Video. This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences."

"Flip Video puts the power to instantly capture, edit and share video into the hands of everyday consumers," said Jonathan Kaplan, chairman and CEO of Pure Digital. "By combining forces with Cisco, we join a company that shares our passion for video and whose global scale and tremendous technology expertise we expect will enable us to quickly expand and enrich the Flip Video experience."

Upon the close of the acquisition, the Pure Digital team will become part of Cisco's consumer business group, which includes Linksys by Cisco home networking, audio and media-storage products. Kaplan will become general manager of the combined organization, reporting to Hooper.

The Pure Digital acquisition exemplifies Cisco's "build, buy and partner" innovation strategy to move quickly into new markets and capture key market transitions. Under the terms of the agreement, Cisco will pay approximately $590 million in stock in exchange for all shares of Pure Digital. In addition, Cisco will provide up to $15 million in retention-based equity incentives for continuing employees. The acquisition is subject to various standard closing conditions and is expected to close in Q4 of Cisco's fiscal year 2009. The acquisition will be accounted for in accordance with generally accepted accounting principles.