Networking equipment giant Cisco Systems (News - Alert) has agreed to acquire digital television company NDS Group for roughly $5 billion to expand its presence in the service provider market.

NDS (News - Alert), co-owned by private equity firm Permira Advisers and Rupert Murdoch's News Corp., develops video software that enables service providers and media companies to deliver content securely to connected devices like smart TVs, digital set-top boxes, PCs and mobile devices. Cisco will leverage the assets acquired in the deal to complement its own Videoscape platform, also used to deliver content to connected devices.

Cisco expects the deal will develop a greater footprint in emerging markets like China and India – nations where NDS holds a strong presence.

The move falls in line with Cisco CEO John Chambers' (News - Alert) aggressive restructuring plan which has helped the company get back on track and post two better-than-expected earnings reports. Chambers made headlines last April when it acknowledged that Cisco had spread itself too thin by trying to compete in dozens of markets. He laid off about 6,500 employees, overhauled the company's management structure and restructured Cisco to focus on five foundational priorities, including its hallmark switching and routing units and video.

"Our strategy has always been driven by customer need and on capturing market transitions," Chambers said in a statement. "Our acquisition of NDS fits squarely into this strategy, enabling content and service providers to deliver new video solutions that leverage the cloud and drive new monetization opportunities and service differentiation."

Reuters (News - Alert) reports indicate the $5 billion deal represents a 35 percent premium on NDS's value when it was taken private in 2009 by Permira and News Corp (News - Alert). The deal includes the assumption of debt and retention-based incentives and is expected to close in the second half of 2012. The boards of directors at both companies have agreed on the deal.

As soon as regulators give their consent, NDS's 5,000 employees will join the Cisco Service Provider Video Technology Group and begin integrating the two product lines.