Cisco Thursday announced a definitive agreement to acquire privately held Linksys Group, the leading provider of wired and wireless network products for consumers and small businesses, for $500 million in stock.

The deal represents Cisco's entry into the high-growth consumer/SOHO market, which is expected to grow from $3.7 billion in 2002 to $7.5 billion in 2006 worldwide, the company says, citing data from Dell'Oro Group and Synergy Research. The acquisition is expected to close in the fourth quarter of Cisco's fiscal year 2003, which runs May through July. 

Linksys has more than 70 products, including wireless routers, access points, network adapters and print servers, as well as a full line of traditional wired products ranging from routers to network attached storage devices. There is no overlap with Cisco, even in low-end switches - Cisco's are managed and Linksys' are unmanaged, according to Linksys President and CEO Victor Tsao.

"We should be able to use some of Cisco's technology selectively later on for future products," Tsao says.

Linksys will be operated as an autonomous division of Cisco, its products sold under the Linksys brand through its existing retail, distributor and e-commerce channels. In addition, Linksys will have access to Cisco's sales infrastructure to address international markets and the service provider channel.