Cisco Systems has announced that it is acquiring Scientific Atlanta, the company that will be supplying the PVR for Telewest's soon-to-be-launched "TV Drive" service.

The transaction, worth around $7bn, is expected to close in the third quarter of Cisco's 2006 financial year.

"Video is emerging as the key strategic application in the service provider triple play bundle of consumer entertainment, communication and online services," said Cisco's president and CEO John Chambers. "The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco's commitment to and leadership in the service provider market. Moreover, Cisco's international presence and IP leadership will also create strategic synergies that accelerate the combined growth opportunity."

Scientific Atlanta will become a division of Cisco's Routing and Service Provider Technology Group. Cisco says that it is "committed to retaining the relationships and go-to-market strategies that both companies have developed."

"We believe that this combination of Cisco and Scientific-Atlanta will benefit our shareholders, our customers and our employees," said Jim McDonald, chairman, CEO and president of Scientific Atlanta. "The combined strengths and resources of our two companies will position us to address more quickly the growing number of opportunities in the markets we serve and enable us to create new products and services that might not have existed otherwise."