05 April 2016

Brocade CEO Lloyd Carney wants to create a network that can turn into a platform for innovation.

Brocade has entered into a definitive agreement to acquire Ruckus Wireless.

The company believes the addition of Ruckus’ higher growth, wireless products will complement its existing enterprise networking portfolio. It also hopes the deal will “significantly strengthen” its strategic presence in the broader service provider market with Ruckus’ “market-leading” Wi-Fi position.

According to Brocade, wireless is a critical access technology and the combination of the two companies creates a new type of “pure-play” networking company, with solutions spanning from the heart of the data centre to the wireless network edge. 

Brocade CEO Lloyd Carney said: “History shows that focused, pure-play companies often innovate faster, are more agile, and deliver better value to their customers.”

Both companies believe that the integration of Wi-Fi and the use of shared access or lightly licensed spectrum are critical to meeting the ever-growing demand for coverage, capacity, and consistency required for next-generation mobile services.

Brocade reckons the acquisition will boost its ability to pursue emerging market opportunities around 5G, IoT, Smart Cities, LTE/Wi-Fi convergence, etc.

Carney added: “This strategic combination will position us to expand our addressable market and technology leadership with Ruckus’ fast-growing wireless LAN products, and supports our vision to deliver market-leading new IP solutions that enable the network to become a platform for innovation.” 

Under the terms of the agreement, Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock. 

Based on the closing price of Brocade’s stock on 1 April  2016, the transaction values Ruckus at a price of $14.43 per common share, or approximately $1.5 billion. The cash portion of the purchase price will be funded through a combination of cash on hand and new bank term loan financing.

The acquisition will be conducted by means of an exchange offer for all of the outstanding shares of Ruckus. The completion of the exchange offer is subject to customary conditions, and is expected to close in Brocade’s third fiscal quarter of 2016.

The Ruckus organisation will be led by current Ruckus CEO Selina Lo who will report directly to Carney.