The $5.9 billion includes $5.5 billion in cash and the assumption by Broadcom of $4 million in Brocade debt. The company’s 5 year Earnings per share growth and Capital Spending growth remains at 26.78 and -17.62.
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As Brocade is a $2.4bn pa business, the near $6bn price is pretty good.
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.
“We have built an attractive IP networking portfolio, created to enable customers to transform their networks into platforms for innovation”, Carney said.
Meanwhile, by combining its existing operations with Brocade’s networking capabilities, Broadcom will be able to significantly boost its presence and capabilities in fibre channel Storage Area Network.
Broadcom plans to divest Brocade’s IP networking business, consisting of wireless and campus networking, data center switching and routing, and software networking.
This basis for this move is because Brocade’s IP portfolio conflicts with the IP portfolios of some of Broadcom’s largest and most valuable customers, according to the company.
Broadcom said it planned to integrate Brocade’s fiber channel storage networking products used in data centers and sell the company’s IP networking business. It will be interesting to see who picks up those assets.
Apple uses Broadcom’s chips in the iPhone.
Brocade, which makes software for digital networks, expanded its addressable market by buying Ruckus earlier this year. The networking specialist had jumped 22% on Monday when news of a pending deal was first reported, and popped again today as it was completed. Brocade has struggled to keep pace with networking titan Cisco Systems Inc and has never come close to reaching the valuation heights it enjoyed before the dot-com boom went bust. “We have built a great company selling primarily semiconductors to OEM system vendors”.
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“When Broadcom approached us with a compelling offer, we had an obligation to consider that offer, along with other alternative opportunities”. Following the transaction, the chief operating officer now directly owns 74,568 shares in the company, valued at approximately $759,847.92. But some layoffs seem inevitable. Zurcher Kantonalbank Zurich Cantonalbank now owns 13,535 shares of the company’s stock worth $124,000 after buying an additional 1,683 shares during the period.
