Broadcom acquiring Brocade in a $5.9bn deal, but to sell IP Networking biz including Ruckus

|November 3, 2016 0

Semiconductor major, Broadcom will acquire Brocade, a leader in Fibre Channel storage area network (FC SAN) switching and IP networking, for approximately $5.5 billion in cash and assuming $0.4 billion of its net debt.

Broadcom plans to divest Brocade’s IP Networking business including Ruckus Wireless, which the company recently bought. Broadcom will seek a buyer for the business, due to competitive overlap with some of Broadcom’s most important customers.

In a blog post, CEO Lloyd Carney indicated the company was not up for sell, but Broadcom approached with a compelling offer that they couldn’t refuse. “This transaction represents significant value for our shareholders, who will receive a 47% premium from the Brocade closing share price on Friday, October 28, 2016,” said Lloyd Carney, Chief Executive Officer of Brocade.

___________________________________________________________________________________________________________

US-based Broadcom itself was sold to Singapore-based Avago Technologies last year in a $37 billion deal.

“This strategic acquisition enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers,” said Hock Tan, President and Chief Executive Officer of Broadcom. “With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers.”

 

“Our best-in-class FC SAN solutions will help Broadcom create one of the industry’s broadest portfolios for enterprise storage. We will work with Broadcom as it seeks to find a buyer for our IP Networking business which includes a full portfolio of open, hardware and software-based solutions spanning the core of the data center to the network edge,” said Carney.

Broadcom currently anticipates that Brocade’s FC SAN business will contribute approximately $900 million of pro forma non-GAAP EBITDA in its fiscal year 2018.

The acquisition is expected to close in the second half of Broadcom’s fiscal year 2017. 

No Comments so fars

Jump into a conversation

No Comments Yet!

You can be the one to start a conversation.