Newport Systems Bought by San Jose Firm in $95-Million Deal

A San Jose company that makes software to connect computer systems has bought Newport Systems Solutions, a 55-employee firm involved in the same kind of business, in a deal valued at $95 million.

Cisco Systems Inc. agreed to acquire all of the Newport Beach company’s outstanding stock and assume all outstanding employee stock options and warrants in exchange for 4.2 million shares. The transaction value is based on a closing price of Tuesday of $22.75, down $1, in trading on the Nasdaq.

A Cisco spokesman said that all of Newport System’s employees are expected to be retained. He said the company, which specializes in computer linkages at small- and medium-sized companies, has a lean staff.

Newport President Larry Stephenson would become a Cisco vice president and general manager of Newport under the sale, which is subject to approval by boards of directors of both companies.

“Newport was the obvious choice for us to acquire,” said John Chambers, Cisco executive vice president. “In our opinion, they are the clear market and technology leader for access products in small- to medium-sized networks, and are the type of company that can substantially enhance our market position.”