Cisco is acquiring Meraki, a cloud networking firm with a speciality in Wi-Fi, for US$1.2 billion. The all-cash deal is expected to close in Cisco’s second quarter which runs until the end of January.

Meraki offers Wi-Fi, switching, security and mobile device management to corporate customers. Its services are cloud-based. The firm’s speciality is using a mesh networking approach which makes it simpler to run Wi-Fi networks used by businesses.

The firm, which was founded by members of MIT’s Laboratory for Computer Science and whose backers include Google, will form a new Cloud Networking Group within Cisco.

The company’s original premise was to build municipal Wi-Fi networks on behalf of Google when such an approach was a main part of the search giant’s strategy.  Mesh networking is used for this type of service, as well as for deploying emergency or temporary networks. 

Meraki subsequently evolved its approach and reapplied the same expertise in mesh networking to the corporate market. Cisco hopes Meraki's technology will enable it to better compete with the likes of Aruba Networks and Ruckus Wireless.

In a letter to employees, which was published by GigaOm, Meraki CEO Sanjit Biswas talked about the company’s success this year. “We successfully shipped another major product family, achieved a US$100 million bookings run rate, grew from 120 to 330 employees and did it all while achieving positive cash flow,” he told staff.  Biswas said he and his two co-founders plan to stay on following Cisco’s takeover.