Cisco Systems Inc. (NASDAQ: CSCO) announced on Tuesday that it would be making a key acquisition. This deal is expected to close in the third quarter of Cisco’s fiscal 2019, and it is subject to customary closing conditions and required regulatory approvals.

Cisco is acquiring the privately held Luxtera, a semiconductor company that uses silicon photonics to build integrated optics capabilities for webscale and enterprise data centers, service provider market segments and other customers. Luxtera’s technology, design and manufacturing innovation significantly improve chip scale and performance while lowering costs.

Cisco plans to incorporate Luxtera’s technology across its intent-based networking portfolio, spanning enterprise, data center and service provider markets.

Under the terms of the agreement, Cisco will pay $660 million in cash and assumed equity awards for the acquisition of Luxtera.

David Goeckeler, executive vice president and general manager, Networking and Security Business at Cisco, commented:

With Cisco’s 2018 Visual Networking Index projecting that global Internet traffic will increase threefold over the next five years, our customers are facing an exponential demand for Internet bandwidth. Optics is a fundamental technology to enable this future. Coupled with our silicon and optics innovation, Luxtera will allow our customers to build the biggest, fastest and most efficient networks in the world.

Shares of Cisco were last seen down less than 1% at $43.96 on Tuesday, in a 52-week range of $37.35 to $49.47. The consensus analyst price target is $52.46.

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