Brocade is acquiring Ruckus Wireless in a cash and stock deal to build its enterprise networking offerings.
The deal, worth approximately $1.5 billion in total or $1.2 in net of estimated cash acquired, will add Ruckus’s wireless products, such as its wi-fi service, to Brocade’s portfolio and expand Brocade’s strategic presence in the service provider space.
Brocade expects that the transaction will be accretive to its earnings by Q1 2017.
Ruckus’s current CEO Selina Lo will lead the Ruckus organisation within Brocade and report directly to Brocade CEO Lloyd Carney.
Brocade hopes that the combination will create a "new type of pure-play networking company".
The acquisition is expected to improve cross-selling activities between the customer and partner bases of the two companies.
In addition, it is intended to strengthen the company’s ability to pursue emerging technologies such as 5G mobile, the IoT, smart cities and convergence between LTE and wi-fi.
Lloyd Carney said: "History shows that focused, pure-play companies often innovate faster, are more agile, and deliver better value to their customers."
Carney claimed that the combined company was positioned to lead in the "rapidly evolving requirements of the digital transformation era.
"We believe that combining our portfolios will provide significant benefits to our customers and will enable us to accelerate our growth and value creation," he said.
The acquisition attracted praise from the industry. Shane Buckley, CEO of Ruckus competitor Xirrus, said: "This move by Brocade confirms our view that enterprise infrastructure vendors recognise the value of developing wireless capabilities as their customers migrate to mobile and embrace BYOD."
Buckley said that the acquisition complements Brocade’s efforts to diversify into campus networks, which the acquisition of Foundry started.
"The challenge is that Ruckus has had a rich history in the service provider market – carriers and hospitality MSPs – but is not as well known in the enterprise campus networking space," said Buckley.
Brocade also announced that it would continue its stock repurchase programme, intended to facilitate the repurchase of all the shares issued in conjunction with this acquisition. The aim is to repurchase them within six months of the acquisition closing.
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