Cisco Systems said Tuesday it will buy software maker Sourcefire for about $2.7 billion to increase its network security offerings.
Following the report, Sourcefire stock surged and Cisco shares were roughly flat.
Cisco will pay $76 per share for the company, a premium of 28.6 percent over its closing price on Monday of $59.08.
The network equipment company said the deal would likely close during the second half of 2013 and it expects the acquisition to be slightly dilutive to non-GAAP earnings in fiscal year 2014.
Cisco has lost market share in network security over the past few years to smaller, more innovative rivals such as Juniper Networks, Check Point Software Technologies, and Palo Alto Networks.
It fell behind in Web applications, social media and video streaming that call for more complex security protection than traditional firewalls provide.
—By Reuters.