Sunday, July 20, 2008

Brocade to Acquire Foundry Networks for $3 Billion

Brocade agreed to acquire Foundry Networks in a deal valued at approximately $3 billion. Under the agreement, Brocade will pay a combination of $18.50 of cash plus 0.0907 shares of Brocade common stock in exchange for each share of Foundry common stock, representing a total value of $19.25 (based on Brocade's closing stock price on Friday, July 18, 2008 of $8.27).

The acquisition will position Brocade as a leading provider of enterprise and service provider networking solutions. Brocade currently offers a range of Storage Area Networks (SANs) and File Area Networks (FANs) solutions. The company is based in San Jose, California.

Foundry, which was founded in 1996 and held its initial public offering in September 1999, supplies a range of enterprise and service provider switching, routing, security and Web traffic management solutions, including Layer 2/3 LAN switches, Layer 3 Backbone switches, Layer 4-7 application switches, wireless LAN and access points, metro routers and core routers. The company is based in Santa Clara, California.

Brocade anticipates financing the acquisition through a combination of cash on hand (at both companies) and approximately $1.5 billion of committed debt financing from Bank of America and Morgan Stanley Senior Funding. The deal is expected to close by the end of calendar 2008. Brocade expects the acquisition to be accretive to in FY 2009.

"We believe the industry is at an inflection point in the way enterprise and service provider networks and data centers are being architected. Customers are demanding networking solutions that meet the needs for today and can address the many advances in network convergence that are still ahead," said Mike Klayko, CEO of Brocade. "Brocade has taken an important step through this acquisition in developing a networking infrastructure strategy that will serve as the foundation for capitalizing on these dynamic opportunities."http://www.brocade.com

  • In January 2008, Brocade introduced its DCX Backbone platform featuring up to 896 ports of 8 Gbps Fibre Channel and aimed at next generation data center networks. Brocade said the new DCX provides more than five times the switching bandwidth of existing SAN directors and supports eight times as many virtual servers. Deployment options including the capability to support Fibre Channel, Fibre Channel over Ethernet (FCoE), Data Center Ethernet (DCE), Gigabit Ethernet, and iSCSI protocols.

    The Brocade Adaptive Networking services features included in the Brocade DCX enable the fabric to dynamically allocate shared resources as changes occur in the requirements of virtual servers and networked storage. If congestion occurs (or is predicted), the fabric can automatically adjust bandwidth and other resources according to defined service levels -- helping to ensure that higher-priority workloads dynamically receive the resources they need.

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