The U.S. networking giant announced an agreement to purchase the set-top box business of China’s DVN for as much as $44.5 million.

 

Cisco (News - Alert) said it will pay about $17.5 million for the DVN division, and will pay the remaining $27 million over the next four years.

 

This is the fourth acquisition for Cisco over the past 35 days and adds to money spent for purchases that now total around $6.2 billion.

 

Cisco agreed to purchase DVN’s cable division because the Chinese cable market is currently the largest in the world with 160 million subscribers and is predicted to grow to as many as 200 million over the next three to five years.  One third of those, according to Cisco officials, are using digital cable, and the communist government has mandated that all users shift to digital set-top boxes by 2015.

 

This latest acquisition solidifies Cisco push into the Chinese market, in efforts to compete with its major rival, Huawei (News - Alert) Technologies.

 

San Jose, Calif.-based Cisco makes and sells set-top boxes around the world through its Scientific-Atlanta business.

 

Under the agreement, DVN unit’s management team will stay on with Cisco. Analysts believe Cisco will take advantage of the relationships that the team has already built in China.

 

Cisco officials also said that the company plans to enter into an alliance with DVN to utilize its software, applications and support services.

 

The acquired set-top box business will become part of Cisco's international cable business unit, while the DVN business will continue to run from China.

 

The deal is expected to close in the first half of 2010.

 

“With this acquisition, we will offer customers the powerful combination of DVN's products with the Cisco IP Next-Generation Network platform,” Ken Klaer, vice president and general manager, International Cable Business Unit at Cisco, said.