Extreme Networks Buys Brocade's Data Center Networking Business from Broadcom
Broadcom, one of the largest semiconductor companies in the world has planned to sell its Brocade Communications Systems' data center switching, routing, and analytics business to Extreme Networks in a new deal worth $55 million. The deal is expected to be a major boost to the data center networking business of Extreme Networks. According to local reports, shares of San Jose, Calif.-based Extreme touched the market cap of $703 million, hours after the report. With Brocade data centre portfolio, Extreme Networks’ could well be in a position to expand its technology growth across all sectors. Extreme Networks has set out to make the transaction in cash, with $35 million at closing and $20 million in deferred payments, as well as the potential for performance-based payments to Broadcom, to be paid over a five-year term.
Last year, Broadcom acquired fellow semiconductor company Brocade for $5.5 billion. But, the company has not been able to finalize the deal due to objections from the Federal Trade Commission. Currently, the deal has been put under an extended antitrust investigation by FTC. Broadcom said that it still expects the merger to close in the second half of fiscal 2017, which ends Oct. 28. Broadcom has said it expects the transaction to close before July 30, 2017, the end of its third fiscal quarter.
Ed Meyercord, President and CEO of Extreme Networks, said: “The addition of Brocade’s data centre networking business significantly strengthens our position in the expanding high-end data centre market and reinforces our strategy of delivering software-driven networking solutions focused on enterprise customers.
“This announcement, coupled with our recent announcements regarding our position as the stalking horse bidder of Avaya’s networking business and the successful completion of the integration of Zebra’s wireless LAN business, along with Extreme’s organic investments in R&D, will result in a state-of-the-art, newly-refreshed portfolio of enterprise solutions for our customers.”
Lloyd Carney, CEO of Brocade, said: “Our two companies [Brocade and Extreme] have similar strategic visions and believe that innovation will increasingly be driven through software capabilities that allow customers to successfully transform their networks for digital business.
“In addition, we believe Extreme’s desire to build on the innovation and momentum of our completely refreshed data centre portfolio, including the new SLX family, as well as its intention to drive the ongoing success of our VDX and MLX families, will allow our customers and partners to continue to leverage the full benefits of our world-class portfolio.”