Comms chips

Broadcom Deal Is Done for Brocade

It's hardly the biggest deal Broadcom's pursuing today, but the chipmaker has announced that it's now completed its $5.9 billion acquisition of Brocade.

The close of the Brocade Communications Systems Inc. (Nasdaq: BRCD) deal comes after months of delays attributed to concerns over Singapore-based Broadcom Corp. (Nasdaq: BRCM)'s exertion of foreign influence in the US. Those fears evaporated, however, when Broadcom announced plans two weeks ago to move stateside in conjunction with federal tax cut plans now being negotiated in Congress. (See Broadcom Heads Home, Clears Way for Brocade Buyout.)

Brocade's stock will now cease trading on the NASDAQ, and the company will begin operating as an indirect subsidiary of Broadcom. According to Broadcom, former Brocade SVP Jack Rondoni will head up the new subsidiary as general manager.

"Broadcom has a track record of successfully integrating and growing companies we acquire, enabling us to offer customers a leading portfolio of best-in-class franchises across a diverse set of technologies," says Hock Tan, president and CEO of Broadcom in a press release. "We intend to invest in and grow the Brocade business to further enhance its capabilities in mission-critical storage networking."

While the Brocade acquisition is no small deal, it does pale in comparison to the $105 billion bid the chipmaker has put up for rival company Qualcomm Inc. (Nasdaq: QCOM). If completed, that transaction would be the largest tech deal ever recorded. However, Qualcomm has rejected the hostile bid, and the fight is now likely headed to a proxy battle involving investors. (See Broadcom Offers $130B for Hostile Takeover of Qualcomm and Qualcomm Rejects $105B Bid From Broadcom.)

Meanwhile, with Brocade now part of Broadcom, the way has cleared for a contingent agreement to move forward that involves Arris Group Inc. (Nasdaq: ARRS) acquiring Brocade's Ruckus Wireless business. (See Is Ruckus Right for Arris?)

In a statement, Arris says, "Now that Broadcom has closed its acquisition of Brocade, Arris expects to complete the Ruckus acquisition promptly following completion of the transaction's review by the Committee on Foreign Investment in the United States ("CFIUS"). The current CFIUS investigation period ends on November 30, 2017."

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

lightreceding 12/4/2017 | 12:45:15 PM
Re: The once great Brocade is no more. Too much of a focus on cost is a reason why companies like Brocade are failing. Their data center switching fabric is buggy and almost unfit for deployment. They are relying on outsourced operations that employ overworked under skilled engineers to save costs. The same problem plagues other networking vendors including Cisco and Juniper. It used to be that networking equipment was designed and developed by engineers with a passion for creating quality products. Now it is built by engineers working in outsource shops with degrees from foreign diploma mills. Even in Silicon Valley over half of the engineers are visa holders with degrees from these same diploma mills. Even when these young under skilled engineers want to build a better product they can't because their teams are understaffed and the production schedule doesn't allow it. So we get short beta testing cycles and limited QA testing and the customer bears the burden of reporting bugs and waiting for fixes. Product quality has suffered greatly since the focus has been on cost cutting and not on building quality products. As a result opensource is growing as an alternative to many vendor provided products or applications are being moved to the cloud where the customer doesn't have to own the infrastructure.
kq4ym 12/4/2017 | 12:19:43 PM
Re: The once great Brocade is no more. It will be interesting to see how the political and financial changes here in the U.S. may actually help as " Broadcom announced plans two weeks ago to move stateside in conjunction with federal tax cut plans." Theoretically they should save perhaps in taxes, but will the operating costa and capital costs negate any portion of that.
lightreceding 11/17/2017 | 12:24:26 PM
The once great Brocade is no more. The switching division got shunted off to Extreme for pennies on the dollar. Yes Extreme are still squeaking by and staying below the radar of Cisco like mice in the Jurassic Period. So sad.
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