Cisco Set to Purchase Topspin

Cisco Systems Inc., the world’s largest maker of computer networking equipment, said Thursday that it would buy Topspin Communications Inc. for $250 million to add to its line of products that connect data network components.

The price for closely held Topspin includes cash and stock options, Cisco said. Topspin, a Mountain View, Calif.-based company with 135 employees, makes so-called fabric switches that connect computer servers to form grids for networks and data storage.

Companies are using more server computers in their data centers to store and retrieve information, sparking demand for switches that link and create networks of servers, Cisco said. Dell Inc., Hewlett-Packard Co. and IBM Corp. use Topspin products.

“Cisco is expanding into storage switching products, one of the growth areas they’ve been preaching about for a while,” said Erik Suppiger, an analyst at Pacific Growth Equities Inc. in San Francisco. “Cisco wants to expand its market share and presence in storage switching.”

Topspin’s owners include Sumitomo Corp. and venture capital investors Accel Partners, Advent International and Redpoint Ventures.

Shares of San Jose-based Cisco fell 19 cents to $17.81 on Nasdaq.

The transaction is expected to close in Cisco’s fourth quarter, which ends July 30.