Broadcom acquires Brocade in $5.9 billion deal

by admin November 2, 2016 at 11:54 am

Broadcom, Ltd bought Brocade Communications Systems today for $5.9 billion, giving the company a foothold far beyond chips in the networking storage business.

It’s quite a nice deal for Brocade shareholders, who gain a 47 percent premium over the $8.69 closing price last Friday night (October 28th). Under the terms of the deal, Broadcom will pay $12.75 per share.

It’s an all-cash transaction with Broadcom also assuming $400 million of net debt.

While Brocade has a broader networking business, under the terms of the deal, Broadcom will divest the IP networking part of the business including Ruckus Wireless, a company Brocade just recently acquired.

It seems what Broadcom had its eye on was the networking storage part of the business and the company believes that by combining the two lines, they could create a powerful entity in the fibre channel Storage Area Network (SAN).

This is a developing story. More to come.

Featured Image: Robert Gauthier/Getty Images

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