Brocade and Ruckus Wireless today announced that Brocade has entered into a definitive agreement to acquire Ruckus Wireless in a cash and stock transaction. The acquisition will add to Brocade’s enterprise networking portfolio, with Ruckus’ higher-growth, wireless products. Brocade expects the transaction to be accretive to its non-GAAP earnings by its first quarter of fiscal 2017. The Ruckus organisation will be led by current Ruckus CEO, Selina Lo, and report directly to Brocade CEO, Lloyd Carney.
Under the terms of the agreement, Ruckus stockholders will receive cash and part shares of Brocade common stock for each share of Ruckus common stock. Net of estimated cash acquired, the transaction value is approximately $1.2 billion.
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. Brocade believes this new IP network will become a a platform for innovation and for developing, delivering, and securing new applications; supporting business agility for the increase in companies digitising their business.
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.
Brocade is also aiming to utilise this acquisition as an oportunity to pursue emerging market opportunities around 5G mobile services, Internet of Things (IoT), Smart Cities, OpenGtm technology for in-building wireless, and LTE/Wi-Fi convergence. Brocade and Ruckus believe that the integration of Wi-Fi and the use of shared access or lightly licensed spectrum are critical to meeting the ever-growing demand for coverage, capacity, and consistency required for next-generation mobile services. These elements are important in Brocade’s strategy to disrupt and enhance the way edge services are created and delivered.
"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, CEO 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. We believe that combining our portfolios will provide significant benefits to our customers and will enable us to accelerate our growth and value creation."
President and CEO of Ruckus Selina Lo agreed. "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. 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. We are excited for the opportunity to join the Brocade team and to jointly deliver innovative, value-added solutions to our enterprise and service provider customers.”
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.