Global wired and wireless semiconductor solutions company Broadcom is acquiring network solutions provider Brocade Communications for US$5.9 billion in a deal which Broadcom says will position the company as one of the leading providers of enterprise storage connectivity solutions to OEM customers.
Under the deal Broadcom, with the support of Brocade, plans to divest Brocade’s IP Networking business, consisting of wireless and campus networking, data centre switching and routing, and software networking solutions.
Broadcom president and chief executive Hock Tan says, “With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers. In addition, we are confident that we will find a great home for Brocade’s valuable IP networking business that will best position that business for its next phase of growth.”
Broadcom will acquire Brocade for US$12.75 per share in an all-cash transaction valued at approximately US$5.5 billion, plus US$0.4 billion of net debt, and expects to fund the transaction with new debt financing and cash available on its balance sheet.
{loadposition peter}“This transaction represents significant value for our shareholders, who will receive a 47% premium from the Brocade closing share price on 28 October and creates new opportunities for our customers and partners,” said Lloyd Carney, chief executive of Brocade.
“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 centre to the network edge.”