In a deal that adds a strong portfolio of wireless and wired networking products and key technologies to address rapidly growing wireless broadband markets for enterprise and service providers, entertainment and communications technologist ARRIS International and semiconductor connectivity solutions specialist Broadcom have entered into an agreement for ARRIS to acquire Brocade Communication Systems Inc.’s Ruckus Wireless and ICX Switch business for cash consideration of $800 million (€944m), plus the additional cost of unvested employee stock awards, following the closing of Broadcom’s acquisition of Brocade. The transaction is contingent on Broadcom closing its acquisition of Brocade Communications Systems, Inc., previously announced on November 2, 2016
This portfolio will expand ARRIS’s leadership in converged wired and wireless networking technologies beyond the home into the education, public venue, enterprise, hospitality, and MDU segments. ARRIS plans to establish a dedicated business unit within the company focused on innovative wireless networking and wired switching technology to address evolving and emerging needs across a number of vertical markets. The business unit will be led by current Ruckus COO, Dan Rabinovitsj.
“We are building upon our successful history of making investments that significantly grow our business and create value for our customers, employees, shareholders and partners,” said Bruce McClelland, ARRIS CEO. “Driven by ever-growing demand for high-speed, reliable, and effortless connectivity, service providers and enterprises will continually invest in their wired and wireless networks. The next five years will see exciting changes as every service provider will become a wireless operator of some fashion. Enterprises and venues will upgrade their broadband networks to provide new innovative value-added services and faster, more seamless Internet access.”
“We have a history of partnering with Ruckus and the talented employees that created this powerful brand and platform. We are excited to welcome about 1,600 new employees and an extensive network of enterprise channel partners to the ARRIS family,” added McClelland.
“ARRIS is a leader powering today’s digital world, and this combination signifies a win-win for Ruckus Wireless and ICX switching employees, partners and customers,” said Dan Rabinovitsj, Ruckus COO. “Joining the ARRIS team will allow us to accelerate the pace of innovation and expand our industry-leading networking portfolio, leveraging ARRIS resources and scale.”
“We are pleased to announce this transaction with ARRIS, which will allow us to focus our energy on quickly integrating Brocade’s Fibre Channel SAN business once we close the Brocade acquisition,” stated Broadcom CEO Hock Tan.
The closing of the transaction is subject to regulatory approvals in various jurisdictions and other customary closing conditions but does not require shareholder approval by either company, is not subject to any financing conditions, and is presently expected to close approximately one month following the closing of Broadcom’s acquisition of Brocade.
The transaction is contingent on Broadcom closing its acquisition of Brocade, previously announced on November 2, 2016 and approved by Brocade shareholders on January 26, 2017. Broadcom presently expects to close the Brocade acquisition in its third fiscal quarter ending July 30, 2017.
According to Paolo Pescatore, VP, Multiplay and Media, CCS Insight, the move is part of grander plans to be a leader in the tech space. “There are plentiful opportunities to grow in other markets as underlined by this acquisition. Rather than simply relying on its core business. However, Ruckus complements its cable broadband strengths. Our latest survey data demonstrates the importance of connectivity in delivering bandwidth-hungry applications. Convergence is at the heart and next generation networks will be a mesh of a variety of network technologies consisting of fixed and mobile. The company seems to be putting the building blocks in place to compete at the next level.”