Cisco announces plans to buy NDS for $5 billion

Networking giant Cisco has announced plans to acquire NDS, a television software maker, for $5 billion in a deal that has been agreed by both companies.

Cisco today agreed to buy NDS Group for approximately $5 billion, in a deal that would bring leading software to the networking giant's next-generation video services.

Both boards of Cisco and NDS approved the transaction, but will be subject to regulatory review by U.S. authorities, and likely European regulators also. The deal is set to be completed by the second quarter.

Cisco said its intention was to acquire the company to speed up the delivery of its Videoscape platform. The new technology, on-demand video can be brought to mobile devices and tablets, bringing the company into the post-PC world.

NDS, a software maker for paid-television channels used by DirectTV and British Sky Broadcasting amongst others, was founded in Israel in 1998 and is based in London. It is 51 percent owned by majority holder Permira private equity fund, and 49 percent Murdoch-owned News Corp.

The company specialises in developing secure delivery of interactive systems for PCs, home entertainment systems, digital TVs, digital set-top boxes, and mobile devices. It also invests in providing e-secure systems for web applications.

Its products allow for smart cards to authenticate end-users to allow the delivery of interactive television services, a vital core to DirectTV's and UK-based Sky's business model.

Cisco's chairman and chief executive John Chambers said: "Our strategy has always been driven by customer need and on capturing market transitions. Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation."

NDS' chief executive Dave Habiger: "This is a transformational opportunity for not only NDS and Cisco, but also our service provider customers and their consumers. Together we make the connected vision a reality."

Cisco's shares slipped by 1 percent in premarket trading.