Under the terms of the agreement, Cisco will pay $76 cash for each of the Columbia, Md.-based company's shares. The price represents a 29 per cent premium over Sourcefire's Monday closing stock price.
Sourcefire shares jumped $16.41, or 28 per cent, to close at $75.49 Tuesday.
Cisco said the addition of Sourcefire will boost its own cybersecurity offerings and speed development of its security strategy of defending, discovering, and remediating advanced threats.
"Sourcefire aligns well with Cisco's future vision for security and supports the key pillars of our security strategy," Hilton Romanski, Cisco's vice-president for corporate development, said in a statement.
The deal also includes the assumption of outstanding stock awards and retention-based incentives. The companies valued it at about $2.7 billion.
Cisco said it expects the deal, scheduled to close in the second half of 2013, to slightly reduce its adjusted profit for fiscal year 2014.
Sourcefire was founded in 2001 and went public in 2007. In 2012, its revenue jumped 35 per cent to $223.1 million.