Breaking News: Broadcom Acquires Brocade

broadcom-brocade-acqusition

Hula Networks’ key OEM vendor Brocade Communications and it’s Ruckus Wireless division has been acquired by Broadcom. Broadcom plans to keep the SAN division of Brocade while divesting itself of the IP business which includes Ruckus Wireless. Hula Networks plans on following this story closely and we are looking forward to a continued relationship with Brocade and Ruckus now and into the future. As events transpire we will continue to update Hula Herald readers.

Broadcom (NASDAQ: AVGO<http://www.investopedia.com/markets/stocks/avgo>) has acquired network solutions provider Brocade Communications (NASDAQ: BRCD<http://www.investopedia.com/markets/stocks/brcd>) for $5.5 billion, plus the assumption of $400 million in debt, bringing the total value of the deal to $5.9 billion.

Broadcom intends to fund the all-cash transaction partly with new debt financing, and the partly with cash on hand. As of last quarter, Broadcom’s cash and equivalents totaled just $1.96 billion, so the majority of the purchase price will have to be covered using debt.

That said, the acquisition will likely end up costing Broadcom considerably less than its initial $5.9 billion price tag since it will immediately sell off one of Brocade’s primary business units. Broadcom said it will “retain Brocade’s Fiber Channel SAN [Storage Area Network] Switching business” and divest its Internet Protocol (IP) networking unit, which now includes Ruckus Wireless which was acquired for $1.5 billion earlier this year.

The reason for the acquisition — and immediate divestiture of the IP unit — is that Broadcom wants to expand its existing enterprise storage and networking offerings. According to Broadcom, the deal will strengthen its position as one of the “leading providers of enterprise storage connectivity solutions to OEM customers.”

Data storage connectivity offerings are expected to be in rising demand for years to come with the advent of the Internet of Things (IoT), and the massive amounts of data already available in our digital world.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s