Broadcom buys Brocade, plans to spin off IP networking business

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Broadcom has agreed a $5.9 billion deal to take over Brocade, as it looks to strengthen its data storage business.

Following regulatory approval, US-based semiconductor company Broadcom plans to spin off Brocade's IP networking business, including Ruckus Wireless, which was acquired back in April. Brocade currently makes hardware, software and storage for networking.

Broadcom will pay the equivalent of $12.75 per share in the deal, of which $5.5 billion is in cash and $400 million is in net debt.

Hock Tan, President and Chief Executive Officer of Broadcom, said: “This strategic acquisition enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers. With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers.

"In addition, we are confident that we will find a great home for Brocade’s valuable IP networking business that will best position that business for its next phase of growth.”

Lloyd Carney, Chief Executive Officer of Brocade, added: “Our best-in-class FC SAN solutions will help Broadcom create one of the industry’s broadest portfolios for enterprise storage. We will work with Broadcom as it seeks to find a buyer for our IP Networking business which includes a full portfolio of open, hardware and software-based solutions spanning the core of the data centre to the network edge.”

The deal will close by the end of October 2017 and is also subject to approval from Brocade's stockholders.