Cisco Systems has expressed its willingness on Thursday that it will buy Duo Security, a venture capital-backed cyber –security company, for a sum of USD 2.35 billion (approx.. Rs.16,200) in cash. The deal is a part of Cisco System’s push to expand its business into a faster growing area of software which is other than its core business.

The deal is considered to be the biggest acquisition for Cisco since its USD 3.7 billion (Approx. Rs. 25,500 crores) AppDynamics last year and its largest in the cyber-security sector since its USD 2.7-billion takeover of Sourcefire in the year 2013. AppDynamics is a business performance monitoring software company.

The deal is an example of “a move toward software and our shift to more recurring revenue with new subscription-based solutions,” Robert Salvagno, head of Cisco’s corporate development said while speaking on a conference call Thursday.

Many of the companies are doing deal hunting to expand their cyber-security offers as corporations are preparing to bulk up their defences against a series of cyber attacks by criminals, hacker activists and spies. Previously this month, AT&T bought telecommunications firm AlienVault – a cyber-security provider for small and medium size businesses.

“Cisco is getting its act together in the cyber-security market,” Credit Suisse analyst Brad Zelnick said in a research note, noting that Cisco has acquired five security companies over the past three years.

The shares of Cisco rose to 1.6 percent at around USD 42.54 (approx.. Rs. 2,930) on Thursday.

The deal is a rare multi billion dollar exit for cyber security venture investors for those who have been pouring all their money at a record pace into a crowded market. There are more than 3,000 cyber security companies with not less than 400 being funded every year, as per the details provided by advisory firm Momentum Cyber.

Benchmark, which is a venture capital firm, saw as many as 20 times return on its early investment in the company as per the inputs provided by a source familiar with the matter. Benchmark was not available to comment over the issue.

The company Duo is based in Ann Arbor, Michigan, had raised USD 119 million till date from investors like Lead Edge Capital, Index Ventures, Workday, True Ventures and True Ventures.

The companies’ platform allows users to be able to verify their identity with an authentication process in two steps, a product that Cisco executives have said that it was a key as more of their customers are now trying to securely connect to those applications in the cloud.

The deal was first reported by Reuters and now is expected to close in the very first quarter of Cisco’s fiscal 2019.

The company has been putting its efforts to convert itself beyond networking. Putting aside security, now, it is also focused on putting investments in what it calls the Internet of Things and cloud-based applications.

Cisco received an adivse from Goldman Sachs and Barclays along with the law firm Fenwick & West. Duo was advised by law firm Gunderson Dettmer and Qatalyst Partners.

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