Network vendor Brocade announced a deal worth around $1.2 billion to acquire Wi-Fi gear maker Ruckus Wireless, in a push to expand its wireless product offering.
In a statement, the company claimed the proposed acquisition complements its enterprise networking technology, while it “significantly strengthens Brocade’s strategic presence in the broader service provider space, with Ruckus’ market leading Wi-Fi position”.
San Jose-based Brocade competes with networking giant Cisco Systems and Hewlett Packard Enterprise. It makes switches and routers for data centers as well as storage-area networking, providing fast links between data storage and servers.
Once the deal closes, which is expected in Brocade’s Q3 fiscal quarter of 2016 subject to US regulatory approval, the two companies will begin cross selling into their respective customer bases.
Brocade added that the integration with Sunnyvale, California-based Ruckus will enable it to “pursue emerging market opportunities around 5G, IoT, smart cities, OpenG technology for in building wireless and LTE/Wi-FI integration”.
Current Ruckus CEO Selina Lo will continue to head up her side of the business, and report into Brocade chief executive Lloyd Carney.
“This strategic combination will position us to expand our addressable market and technology leadership with Ruckus’ fast growing wireless LAN products, and supports our vision to deliver market leading new IP solutions that enables the network to become a platform for innovation,” said Carney.
Under terms of the agreement, Ruckus shareholders will receive $6.45 in cash and 0.75 shares in Brocade. Based on Brocade’s closing price last Friday, the transaction values Ruckus at $14.43 per common share.
The deal is valued at about $1.2 billion, based on Ruckus’ cash acquired, and the price may fluctuate until it closes, added Brocade.
Brocade also raised its share buyback program by $800 million, bringing the total remaining authorised under the program to around $1.7 billion.
“This increase is intended to facilitate the repurchase of all shares issued in conjunction with the Ruckus acquisition,” it said.