Cisco Completes Acquisition of Nuova

Cisco has completed the purchase of San Jose-based Nuova Systems, a startup focused on the development of next-generation products for the data center market.

In August 2006, Cisco announced its initial investment in Nuova. Prior to the acquisition, Nuova operated as a majority-owned subsidiary of Cisco, which had invested $70 million and owned 80 percent of the company. In conjunction with the investment, the companies entered into a call-option agreement, which gave Cisco the right to purchase the remaining 20 percent of Nuova stock. On April 8, 2008, Cisco announced it would acquire the remaining portion of Nuova that it did not already own.

The final purchase price is success-based with the total value primarily determined by the revenue of Nuova products over three measurement periods. The first measurement period will commence in early fiscal year 2010, the second measurement period will commence in late fiscal year 2010, and the third measurement period will commence in mid fiscal year 2011. The minimum payout will be $10 million; maximum payout will be $678 million.

The acquisition of Nuova supports Cisco’s Data Center 3.0 vision by allowing IT organizations to dynamically respond to changing business demands through rapid provisioning of application and infrastructure services from shared pools of consolidated compute, storage, and network resources.

Nuova will operate as an independent business unit led by Luca Cafiero, Prem Jain and Mario Mazzola reporting directly to John Chambers, Cisco’s CEO and chairman. Jain will join the development council in Cisco’s Development Organization.