Extreme Networks set to acquire data center business from Brocade Communications within a month

Extreme Networks announced Tuesday that it has signed an asset purchase agreement with Brocade Communications Systems, to purchase the company’s Switching, Routing and Analytics (SRA) data center business for substantially the same terms as the previously announced agreement between Extreme and Broadcom.

The transaction is expected to close within 30 days and is subject to the satisfaction or waiver of customary closing conditions.

The acquisition of Brocade’s data center networking business will strengthen Extreme’s position in the networking market and expands the company’s state-of-the-art portfolio of data center, core, campus and edge networking solutions.

Brocade’s data center networking business will be sold to Extreme for $55 million in cash, consisting of $35 million at closing and $20 million in deferred payments, as well as additional potential performance based payments to Broadcom, to be paid over a five-year term, the companies announced in March this year.

The acquisition of Brocade’s data center switching, routing, and analytics business from Broadcom enhances Extreme’s data center technology portfolio, strengthens its go-to-market strategy across target verticals and allows the company to compete in the large enterprise data center. This news, combined with Extreme’s organic investments in R&D and the recent announcements regarding Avaya’s networking business and integration of Zebra’s wireless LAN business reinforces Extreme’s corporate strategy of becoming the initial end-to-end pure-play enterprise networking company with a focus on customer service and support.

As part of the transaction, Extreme will acquire customers, personnel and technology assets from Brocade, further solidifying Extreme as a top solution provider for enterprises in its target verticals of education, hospitality, healthcare, retail, transportation and logistics, manufacturing and government.

“We expect this agreement directly with Brocade to accelerate our ability to close our acquisition of the data center business,” said Ed Meyercord, President and CEO of Extreme Networks. “This is a very positive development for all stakeholders, but especially for customers, partners and employees of Brocade’s data center networking business. Given all of the work that has gone into our business integration planning and our proposed product roadmap, Extreme is now poised to bring this deal over the finish line.”

“We are pleased to move forward with an agreement to directly divest our data center networking business to Extreme,” said Lloyd Carney, CEO of Brocade. “We believe this decision will position the business for continued success, and is in the best interests of our shareholders, customers, partners and employees aligned with the business. Extreme’s complementary portfolio of products, coupled with its planned continued investment into our roadmap and its commitment to continued support of our products, make it a great fit for our business and a positive outcome for our stakeholders.”

Purchasing the data center networking asset directly from Brocade does not impact Extreme’s strategic partnership with Broadcom, which will continue uninterrupted. Extreme continues to anticipate the transaction will be accretive to cash flow and earnings for its fiscal year 2018, which began on July 1, and expects to generate over $230 million in annualized revenue from the acquired assets.

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