Cisco to acquire security unicorn Duo for $2.35 billion

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Cisco Systems Inc. has agreed to pay $2.35 billion for security startup Duo Security, the companies announced Thursday morning, beefing up the networking company’s software offerings.

Duo is an authentication service that focuses on two-factor authorization, helping to identify a company’s employees across a range of devices or applications, a product somewhat similar to Okta Inc. OKTA, +4.75%  , which went public in 2017 and currently has a market cap of more than $5 billion. The deal gives Cisco CSCO, -1.02%  , one of the larger players in the security market, a cloud native to boost recurring revenue and services.

“We’ve been building a world-class security architecture for some time,” Cisco Security executive David Goeckleler said in an interview with Marketwatch ahead of the announcement Tuesday morning. “What Duo allows us to do is extend that architecture to wherever users are.”

Duo had previously been valued at about half the total Cisco is paying, which includes some equity payouts. The deal is expected to close in the first quarter.

This article will be updated.