Chipmaker Broadcom has announced a $5.9 billion deal to acquire network equipment manufacturer Brocade to enhance its position in the storage networking business.
The acquisition, which involves $5.5 billion in cash and the assumption of $400,000 in debt, includes the assets of Ruckus Wireless, which Brocade purchased for $1.2 billion earlier this year.
But Broadcom has announced that it intends to divest Brocade's IP networking business, which includes wireless and campus networking, data center switching and routing, as well as SDN. This represents a substantial part of the Ruckus Wireless assets.
Broadcom anticipates that Brocade's remaining fiber channel storage area network (FC SAN) business will contribute around $900 million to the company's ebitda for its 2018 fiscal year.
“This strategic acquisition enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers,” Broadcom president and CEO Hock Tan said.
“With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers. In addition, we are confident that we will find a great home for Brocade’s valuable IP networking business that will best position that business for its next phase of growth.”