Brocade(R) today announced a definitive agreement to purchase Foundry Networks(R), Inc., a performance and total solutions leader for network switching and routing. The acquisition will position
Brocade as a leading provider of enterprise and service provider networking solutions, with innovative technology and product leadership from the Internet to the heart of data centers.
The acquisition will bring together two financially strong companies in complementary technology sectors and allow the combined entity to better address today’s customer needs, as well as the evolution toward converged networks. Brocade also believes that the combined company will be well-positioned to create unique synergies, and to leverage the respective technologies, customer segments, and distribution channels of the two companies to accelerate growth and innovation in key markets.
“Through this deal, Brocade has now uniquely positioned itself in the networking industry to deliver a leading, alternative solutions portfolio spanning local, metro, wide and storage area networks,” said Zeus Kerravala, senior vice president, Global Enterprise Research at the Yankee Group. “The breadth and depth of this portfolio make Brocade a viable option for customers looking for complete networking solutions capable of addressing their constantly evolving and increasingly complex IT challenges.”
Under the agreement, Brocade will pay a combination of $18.50 of cash plus 0.0907 shares of Brocade common stock in exchange for each share of Foundry common stock, representing a total value of $19.25 (based on Brocade’s closing stock price on Friday, July 18, 2008 of $8.27). The transaction has an aggregate purchase price of approximately $3.0 billion on a fully diluted basis, and is expected to be accretive to Brocade non-GAAP EPS in its fiscal year 2009, with non-GAAP EPS accretion expected to accelerate in Brocade’s fiscal year 2010. The acquisition is expected to close in the fourth quarter of calendar year 2008.
The acquisition has been approved by the board of directors of each company and is subject to approval by Foundry’s stockholders, regulatory approval and certain other closing conditions. Brocade anticipates financing the acquisition through a combination of cash on hand (at both companies) and approximately $1.5 billion of committed debt financing from Bank of America and Morgan Stanley Senior Funding, Inc., subject to customary terms and conditions.
“We believe the industry is at an inflection point in the way enterprise and service provider networks and data centers are being architected. Customers are demanding networking solutions that meet the needs for today and can address the many advances in network convergence that are still ahead,” said Mike Klayko, CEO of Brocade. “Brocade has taken an important step through this acquisition in developing a networking infrastructure strategy that will serve as the foundation for capitalizing on these dynamic opportunities.”
Foundry was founded in 1996 and held its initial public offering in September 1999. The company has continually been an innovator and performance leader in data networking solutions for enterprises and service providers. Foundry has approximately 1,100 employees with operations in all major geographies. In a separate announcement today, Foundry also announced its preliminary financial results for the second quarter of its 2008 fiscal year.
Kaynak : 