Brocade has announced it has entered into a deal to acquire WiFi network firm Ruckus for $1.2bn.
Brocade explained that the deal will allow the firm to cover all bases when providing network needs for modern businesses, especially as these now underpin companies' efforts to embrace digital technology and transformation.
“With the rapidly evolving requirements of the digital transformation era, we are positioning ourselves to lead where technology is headed,” said Lloyd Carney, chief executive of Brocade.
“We believe that combining our portfolios will provide significant benefits to our customers and will enable us to accelerate our growth and value creation."
The deal is expected to close by the third quarter of this year, and start adding financial value to Brocade’s bottom line by the first quarter of next year. Ruckus will be run as a separate business unit, headed by current CEO Selina Lo.
Lo explained that the move is a great deal for both companies as they can bring their complementary offerings together into one product portfolio.
"The combination of our two companies will create an exciting new thought leader in networking and significant opportunities for our stakeholders to participate in the combined company's future growth potential,” she said.
"We operate in adjacent segments of the larger networking market with a number of common customers for our complementary products, and have a successful track record of working together.”
However, while Brocade is now in a prime position to acquire Ruckus, some analysts have noted that the likes of Nokia or Juniper may look to gazump Brocade, given the move by more traditional network firms to acquire WiFi providers.
“We would not rule out the emergence of other bids given the standard $50m break-up fee and the interest it might attract from Ericsson, Nokia, CommScope and Juniper, among others,” BTIG analyst Walt Piecyk said in a research note.
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