{"id":1339,"date":"2016-11-02T15:37:30","date_gmt":"2016-11-02T15:37:30","guid":{"rendered":"http:\/\/www.rsoftsolution.com\/blog\/broadcom-acquires-brocade-in-5-9-billion-deal.html"},"modified":"2016-11-02T15:37:30","modified_gmt":"2016-11-02T15:37:30","slug":"broadcom-acquires-brocade-in-5-9-billion-deal","status":"publish","type":"post","link":"https:\/\/www.rbsitsoftwaresolution.in\/blog\/broadcom-acquires-brocade-in-5-9-billion-deal.html","title":{"rendered":"Broadcom acquires Brocade in $5.9 billion deal"},"content":{"rendered":"


\n<\/p>\n

Broadcom, Ltd<\/a> bought Brocade\u00a0Communications Systems<\/a> today for $5.9 billion, giving the company a strong offering\u00a0in\u00a0networking storage\u00a0business.<\/p>\n

It\u2019s 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.<\/p>\n

It\u2019s an all-cash $5.5 billion transaction with Broadcom also assuming\u00a0$400 million of net debt for the total of $5.9 billion.<\/p>\n

While Brocade\u00a0has a\u00a0broader 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<\/a>.<\/p>\n

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) business.<\/p>\n

In a blog post on the Brocade community blog<\/a>, CEO Lloyd Carney indicated his company wasn\u2019t looking to sell, but Broadcom offered a deal so compelling they couldn\u2019t refuse. A 47 percent share price premium will tend to do that.<\/p>\n

But the company also saw an opportunity\u00a0to create a networking storage powerhouse by combining with Broadcom. \u201cAs part of this transaction, our Storage Area Network (SAN) business, will offer a strong complement to Broadcom\u2019s offerings and capabilities, creating one of the industry\u2019s broadest portfolios for enterprise storage,\u201d Carney wrote in the blog post.<\/p>\n

Carney indicated that the two companies decided to sell the rest of the networking business because of \u201ccompetitive overlap\u00a0with some of Broadcom\u2019s most important customers.\u201d In other words, Broadcom didn\u2019t need that part of Brocade\u2019s business competing with what it was already offering, and it didn\u2019t have enough unique customers to make keeping it worthwhile (and I suspect it will also help pay for the deal as well).<\/p>\n

The nature of the deal in which they are planning to sell off parts of the business will have to create a level of uncertainty among Brocades\u2019s current customer base. The company blog post did little to address that.\u00a0Ruckus Wireless, the company it bought last April\u00a0suddenly finds\u00a0itself in no-man\u2019s land with no clear understanding of who its\u00a0owner will ultimately be.<\/p>\n

Broadcom itself was sold to Avago in a massive $37 billion deal<\/a> in May, 2015, but apparently can continue to make its own deals, even as part of the larger entity.<\/p>\n

Today\u2019s deal is expected to close in October next year, and is of course going to be subject to regulatory approval.<\/p>\n

<\/p>\n

Featured Image: Robert Gauthier<\/a>\/Getty Images<\/small><\/p>\n

Article source: http:\/\/feedproxy.google.com\/~r\/techcrunchIt\/~3\/0BAQd0o1uyQ\/<\/p>","protected":false},"excerpt":{"rendered":"

Broadcom, Ltd bought Brocade\u00a0Communications Systems today for $5.9 billion, giving the company a strong offering\u00a0in\u00a0networking storage\u00a0business. It\u2019s quite a nice deal for Brocade shareholders, who gain a 47 percent premium <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[19],"tags":[25],"class_list":["post-1339","post","type-post","status-publish","format-standard","hentry","category-enterprise-software","tag-enterprise"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t