Cisco is to buy privately held CoreOptics, a designer of digital signal processing solutions for high-speed optical networking applications.

Under the terms of the agreement, Cisco will pay approximately $99 million in cash and retention-based incentives in exchange for all shares of CoreOptics.

The acquisition is subject to customary closing conditions and is expected to close in the second half of calendar year 2010.

CoreOptics’ product portfolio includes advanced 10Gbps and 40Gbps transponders for metropolitan, regional and long haul optical systems using different protocols.

Based in San Jose, with the majority of its employee base in Germany, CoreOptics will enable Cisco to equip service provider customers with 100 Gigabits per second (Gbps) transmission technology to scale their networks to “meet the demands of rapidly growing Internet Protocol traffic driven by video, mobility and cloud services”.

The acquisition of CoreOptics expands Cisco’s optical presence in Europe, building on its existing European operations in Monza, Italy. Upon completion of the acquisition, all 116 CoreOptics employees will become part of the Cisco Service Provider Technology Group.

CoreOptics, founded in January 2001, was backed with roughly $90 million in venture capital from multiple investors and strategic partners, including Crescendo Ventures, TVM Capital, GIMV, High Tech Private Equity, Atila Ventures, QUEST FOR GROWTH and T-Com Venture Fund.

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