Cisco Systems to Buy GeoTel in $2-Billion Deal

Computer-networking company Cisco Systems Inc. said Tuesday that it will buy GeoTel Communications Corp. in a $2-billion stock deal, a move to expand its foothold in the Internet phone business.

Cisco, the leading maker of hardware that directs traffic on the Internet, said the purchase of GeoTel, a producer of call-routing telecommunications software, will help deliver voice communications over the Web.

San Jose-based Cisco has been racing to capture a piece of computer networking’s future by moving into telecommunications via the Internet, in part to offset an easing of sales growth in the corporate market for data equipment.

“Today’s announcement is an extension of our commitment to open-voice technology,” Don Listwin, Cisco executive vice president, said in a statement.

Lowell, Mass.-based GeoTel would give Cisco a product that quickly connects phone users to customer service representatives, a feature that Cisco plans to adapt this year for Internet providers to answer customer questions online.

Cisco said that under the deal, it will exchange 0.5138 share of its common stock for every outstanding share and option of GeoTel. The agreement would give GeoTel shareholders $60.50 a share, a 37% premium based on Monday’s closing price.

The merger, which has been approved by the boards of both companies, is expected to be completed by the end of July.

Cisco last week said it was buying two privately held telephone equipment companies, Sentient Networks and Fibex Systems, for $445 million in stock as part of its Internet telecommunications effort.

Cisco has bought or agreed to buy more than 30 companies as part of an acquisition spree that began in September 1993.

Shares of Cisco fell $3.63 to close at $114.13. GeoTel shares were up $11.69 to close at $55.94. Both trade on Nasdaq.