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Broadcom acquires Brocade in a $5.9 billion deal

Broadcom, Brocade
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And yet another multi-billion acquisition. Broadcom Ltd has acquired Brocade in a $6 Billion deal. The deal will significantly expand the company’s product portfolio, while also giving it deeper access to some new, potentially lucrative markets.

Broadcom is a US based designer, developer and global electronics supplier. Most of the companies products use analog or digital semiconductor technologies and belong to wired infrastructure, wireless communications, enterprise storage or industrial usage categories. It is also a prominent chipmaker and counts various prominent OEMs amongst its customers.

Brocade on the other hand, is a major producer and supplier of data and storage networking products. Along with Fibre Channel storage networks, the company has of late been moving into products for New IP and Third platform tech. Brocade’s fiber channel protocol-based networking products are extensively used to build storage area networks within data centers.

Speaking about the acquisition, Broadcom Chief Executive Hock Tan said,

This strategic acquisition enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers.

However, the IP networking part of Brocade’s business — including Ruckus Wireless, a company acquired recently — will be divested separately. This would leave the core, networking part in Broadcom’s possession

Speaking on the topic, Brocade Chief Executive Lloyd Carney said,

We will work with Broadcom as it seeks to find a buyer for our IP Networking business.

Broadcom has apparently agreed to pay Brocade a sum of $12.75 per share. This give Brocade shareholders a pretty cool premium. The chipmaker has also agreed to assume Brocade’s $400 million or so of debt. The transaction will take place on an all-cash basis.

Meanwhile, by combining its existing operations with Brocade’s networking capabilities, Broadcom will be able to significantly boost its presence and capabilities in fibre channel Storage Area Network. Judging by the divestment of Brocade’s IP networking operations, this appears to have been the plan all along.

More news on the deal, along with information about the terms is expected to follow later.

A bibliophile and a business enthusiast.

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