Cisco Systems plans to acquire privately held Pure Digital Technologies, which sells the popular Flip Video cameras, for $590 million in stock.
To date Pure Digital has sold more than 2 million Flip cameras, which let users record, edit and upload videos instantly to YouTube, MySpace and other video-sharing Web sites.
"This acquisition will take Cisco's consumer business to the next level as the company develops new video capabilities and drives the next generation of entertainment and communication experiences," Ned Hooper, senior vice president of Cisco's Corporate Development and Consumer Groups, said in a statement.
Once the deal closes, Pure Digital will become part of Cisco's Consumer Business Group, which includes the Linksys home-networking product family.
In addition to $590 million in stock in exchange for all shares of Pure Digital, Cisco will provide up to $15 million in retention-based equity incentives for continuing employees. The acquisition is subject to various standard closing conditions and is expected to close in the fourth quarter of Cisco's fiscal year 2009.