Brocade (NASDAQ: BRCD) agreed to acquire Ruckus Wireless, Inc. (NYSE: RKUS) in a cash and stock deal valued at $1.5 billion. Net of estimated cash acquired, the transaction value is approximately $1.2 billion.
The acquisition will complement Brocade’s enterprise networking portfolio, adding Ruckus’ higher-growth, wireless products to Brocade’s market-leading networking solutions. It will also significantly strengthen Brocade’s strategic presence in the broader service provider space, with Ruckus’ market-leading Wi-Fi position. Brocade expects the transaction to be accretive to its non-GAAP earnings by its first quarter of fiscal 2017. The Ruckus organization will be led by current Ruckus CEO, Selina Lo, and report directly to Brocade CEO, Lloyd Carney.
Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock, which values Ruckus at an implied price of $14.43 per share.
Wireless is a critical access technology and the combination of Brocade and Ruckus creates a new type of pure-play networking company, with solutions spanning from the heart of the data center to the wireless network edge. The acquisition is expected to accelerate cross-selling activities into the respective companies’ partner and customer bases, opening up new revenue opportunities for the combined company across a variety of verticals, including large enterprises, K-12 and higher education, government, hospitality, and service providers.
“This strategic combination will position us to expand our addressable market and technology leadership with Ruckus’ fast-growing wireless LAN products, and supports our vision to deliver market-leading New IP solutions that enable the network to become a platform for innovation,” said Lloyd Carney, chief executive officer of Brocade. “History shows that focused, pure-play companies often innovate faster, are more agile, and deliver better value to their customers. With the rapidly evolving requirements of the digital transformation era, we are positioning ourselves to lead where technology is headed.”
“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,” said Selina Lo, president and CEO of Ruckus. “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.”
The deal is also expected to strengthen Brocade’s ability to pursue emerging market opportunities around 5G mobile services, Internet of Things (IoT), Smart Cities, OpenG technology for in-building wireless, and LTE/Wi-Fi convergence.
The acquisition will be conducted by means of an exchange offer for all of the outstanding shares of Ruckus. The completion of the exchange offer is subject to customary conditions, including reviews by U.S. and international antitrust regulators and the tender of a majority of the outstanding shares of Ruckus’ common stock. The companies expect the transaction, which has been approved by both companies’ boards of directors, to close in Brocade’s third fiscal quarter of 2016.
Ruckus Wireless, Inc. provides Wi-Fi solutions to more than 65,300 service providers and enterprises worldwide. the company was incorporated in 2002 and is headquartered in Sunnyvale, California.
Brocade Communications Systems, Inc. provides storage area networking (SAN) and Internet protocol (IP) networking solutions for businesses and organizations worldwide. The company was founded in 1995 and is headquartered in San Jose, California.