Cisco Systems Inc. is on a roller coaster ride, as it signed its second multibillion- dollar acquisition in less than two weeks. The largest maker of networking equipment has accepted to purchase Starent Networks Corp. in a deal valued at $2.9 billion. 

Cisco intends to pay $35 a share in cash and mulls outstanding equity awards. A statement issued today informed that the per-share price is 21 percent more than Starent's closing price yesterday. The San Jose, California based Cisco hopes the transaction to add to earnings by fiscal 2012.

With the help of Starent's equipment, wireless carriers are able to understand what sort of traffic is crossing their networks. This makes speedy routing of that information to mobile devices possible. Via the acquisition, Cisco will be able to benefit from the growing demand for phones like the iPhone and BlackBerry. 

Joanna Makris, an analyst at Brigantine Advisors expressed, "Cisco sees the consumer trend toward the pervasive adoption of mobile devices. They want to find a way to drive network traffic and the growth of their infrastructure business."

Cisco predicts the business under global data to get doubled every year through 2013. The motive of Cisco is to add technologies, which enhance Internet traffic, thus expanding demand for its routers and switches. Cisco might acquire a larger portion of carriers' budgets, with Starent, as they upgrade their networks to handle growing Internet traffic. 

Due to a drop in demand at Cisco's main Internet-networking business, there were three straight quarters of sales declines. Cisco, as on 1st October, accepted to purchase Norway's Tandberg ASA for about $3 billion with the aim of expanding its line of videoconferencing products.

As per Ned Hooper, head of Cisco's acquisition efforts, three percent breakup fee will be paid by Starent, if it gets sure of taking a rival offer. Apart from this the company also mulls to make more acquisitions.

Verizon Wireless, which estimated for nearly 70 percent of sales in the second quarter, is the main customer of Starnet, which has Vodafone Group Plc. and Sprint Nextel Corp. as its other customers. 

Anil Doradla, an analyst at William Blair & Co. in Chicago explained, "Starent's efforts to diversify away from Verizon may have been an uphill battle. With Cisco's backing, we believe the company is better positioned to compete for business with Tier-1 mobile operators outside Verizon."