Extreme Networks To Acquire Data Center Assets Directly From Brocade, Won't Wait For Broadcom


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In an effort to acquire technology assets from Brocade Communications within the next 30 days, Extreme Networks said Tuesday that it will buy Brocade's data center business directly from the vendor itself.

Brocade is expected to be acquired by Broadcom later this month but has faced several delays over the course of 2017, including the need for a deeper review of the acquisition  by the Committee on Foreign Investment in the United States. The initial Brocade-Extreme acquisition deal unveiled in March was supposed to take place immediately after Broadcom acquired Brocade, but that is no longer the case.

Extreme said it has signed an asset purchase agreement with Brocade to aquire the vendor's switching, routing and analytics data center business for substantially the same terms as first announced in March -- $55 million. This transaction is expected to close within 30 days, according to Extreme.

[Related: Extreme Networks CEO Talks M&A Strategy, Revamping The Company And 'Significant' New Channel Investment]

"We expect this agreement directly with Brocade to accelerate our ability to close our acquisition of the data center business," said Ed Meyercord, president and CEO of Extreme, in a statement. "This is a very positive development for all stakeholders, but especially for customers, partners and employees of Brocade's data center networking business. Given all of the work that has gone into our business integration planning and our proposed product road map, Extreme is now poised to bring this deal over the finish line."

Extreme anticipates the Brocade transaction will generate over $230 million in annualized revenue from the acquired assets.

As part of the deal, Extreme will also acquire customers and personnel assets from Brocade, which Extreme said will further solidify it as a top vendor in its target verticals of education, hospitality, health care, retail, transportation and logistics, manufacturing and government.

Extreme's stock jumped 7 percent Tuesday morning to $12.95 per share.

Extreme said the data center networking assets will not impact Extreme's strategic partnership with Broadcom.

Brocade CEO Lloyd Carney said he's "pleased' to move forward with the agreement directly with Extreme. "We believe this decision will position the business for continued success, and is in the best interests of our shareholders, customers, partners and employees aligned with the business," he said.

Brocade is shedding hundreds of positions before its acquisition by Broadcom. A total of 230 employees based in the U.S. have accepted a voluntary separation plan and are set to leave Brocade during the company's current fourth fiscal quarter, which ends Oct. 28.

 

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