Brocade to pay $3B for Foundry Networks

Brocade has entered a definitive agreement to purchase Foundry Networks Inc., a network switching and routing solutions provider, for approximately $3 billion.

The acquisition will bring together two companies in complementary technology sectors and allow the combined entity to better address customer needs and the evolution toward converged networks. Brocade believes that the combined company will be well-positioned to create unique synergies, and to leverage the respective technologies, customer segments, and distribution channels of the two companies to accelerate growth and innovation in key markets.

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 July 18 of $8.27). The transaction has an aggregate purchase price of approximately $3 billion on a fully diluted basis. The acquisition is expected to close in Q4 08.

The acquisition has been approved by the board of directors of each company and is subject to approval by Foundry's stockholders, regulatory approval and certain other closing conditions.

"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."

"Brocade and Foundry bring complementary strengths to the table in terms of technology leadership, product portfolio, and the ability to capitalize on key market trends," said Bobby Johnson, Jr., president and CEO of Foundry. "Together we believe we will be a much stronger entity with a compelling value proposition to compete more effectively in, and across, our respective markets."