Logitech said it is buying privately held LifeSize Communications for $405 million, bolstering its position in the much-prized video communication market, which is seen as a key source of future growth.
LifeSize Communications has more than 9,000 video conferencing customers, Logitech -- the world's largest computer mouse maker -- said late on Tuesday.
We expect this acquisition to extend our leadership in video communication beyond the desktop, Logitech Chief Executive Gerald Quindlen said.
The deal should be neutral to slightly positive to operating income in its 2011 fiscal year and positive thereafter, said Logitech, which also makes speakers, webcams and keyboards.
LifeSize sees revenue of around $90 million for 2009, which is expected to grow between 40 and 60 percent in 2010.
Shares in Logitech rose 2.04 percent by 0943 GMT, against a 0.5 percent higher Swiss midcap index and a 0.5 percent rise in Norwegian video conferencing equipment company Tandberg.
Analysts at Swiss bank Wegelin said the acquisition made sense, even though Logitech was paying a considerable price. Logitech has long-since proved itself to be the one that stands out from the crowd, they said.
On Tuesday, Cisco Systems Inc revealed that most shareholders in Tandberg had spurned its 17.2 billion Norwegian crown ($3.08 billion) ($3.1 billion) takeover offer.
Few analysts expect Cisco to drop its bid as it has repeatedly touted online video conferencing as a key growth area.
No other company has yet publicly shown interest in Tandberg. But analysts have said that regardless of whether and how the Cisco-Tandberg deal closes, it could trigger more transactions involving video conferencing companies like No. 2 player Polycom Inc.
Hewlett-Packard also offers high-end video conferencing.
($1=5.588 Norwegian Crown)
(Additional reporting by Jason Rhodes; Editing by Greg Mahlich and Hans Peters)