Broadcom closes $5.5 bn acquisition of Brocade Communications
20 November 2017
Broadcom Ltd yesterday said that it has closed its $5.5-billion acquisition of network gear maker Brocade Communications Systems Inc.
The closing of the Brocade deal comes a few days after Broadcom made an audacious $103 billion unsolicited bid to acquire its larger rival Qualcomm Inc. (See: Broadcom reported in $100-bn bid to buy out rival chipmaker Qualcomm)
Brocade's common stock will now cease to be traded on Nasdaq and Brocade will operate as an indirect subsidiary of Broadcom and will be led by Jack Rondoni as general manager.
The Brocade deal was announced in November 2016 but the US Committee on Foreign Investment took time to approve the deal since Broadcom, which is based in Singapore, supplies Cisco with key components for its Fibre Channel products.
"We are pleased to complete this transaction, which strengthens Broadcom's position as a leading provider of enterprise storage and networking solutions and enables us to better serve our OEM customers," said Hock Tan, president and CEO of Broadcom.
"Broadcom has a track record of successfully integrating and growing companies we acquire, enabling us to offer customers a leading portfolio of best-in-class franchises across a diverse set of technologies. We intend to invest in and grow the Brocade business to further enhance its capabilities in mission-critical storage networking," he added.
Brocade also announced that it has signed an agreement with Extreme Networks to directly divest its data center switching, routing and analytics business.
The proposed transaction would be completed in lieu of the previously announced sale of that business by Broadcom to Extreme Networks following Broadcom's proposed acquisition of Brocade.
Brocade and Extreme Networks presently expect to close this transaction prior to the closing of Broadcom's acquisition of Brocade, subject to the satisfaction or waiver of customary closing conditions. The transaction does not require shareholder approval by either company, and is not subject to any financing condition.
California-based Brocade specialises in data and storage networking products. It started with fibre channel storage networks and later expanded into routers and network switches for data centres.
Broadcom, created in 2016 when Avago Technologies Ltd acquired Broadcom Corp for $37 billion, has built itself from a former Hewlett Packard division into one of the largest chipmakers via a string of purchases.
Broadcom, which counts Apple Inc among its largest customers, is among the five largest chip manufacturers and has an annual turnover of $13.24 billion.