SINGAPOREย andย SAN JOSE: Broadcom Limitedย and Brocade Communications Systems, Inc. today announced that they have entered into a definitive agreement under whichย Broadcom will acquire Brocade, a leader in Fibre Channel storage area network (โFC SANโ) switching and IP networking, for $12.75 per share in an all-cash transaction valued at approximatelyย $5.5 billion, plus $0.4 billion of net debt. Broadcomย expects to fund the transaction with new debt financing and cash available on its balance sheet. Broadcom, with the support of Brocade, plans to divest Brocadeโs IP Networking business, consisting of wireless and campus networking, data center switching and routing, and software networking solutions.
With the acquisition Broadcom would retain Brocade’s Fibre Channel SAN switching business but divest its IP networking business. Once closed, the deal is expected to be immediately accretive to Broadcom’s non-GAAP free cash flow and earnings per share. It is expected to add about $900 million in non-GAAP EBITDA in fiscal year 2018. The deal is expected to close in the second half of Broadcom’s fiscal year 2017, which began on Oct 31. Shares of Brocade Communications Systems were up 9% in premarket trade.
