UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Brocade
Communications Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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This Schedule 14A filing consists of the following communications relating to the proposed acquisition (the
Acquisition) of Brocade Communications Systems, Inc. (Brocade) by Broadcom Limited (Ultimate Parent), a limited liability company organized under the laws of the Republic of Singapore, Broadcom Corporation
(Parent), a California corporation and an indirect subsidiary of Ultimate Parent, and Bobcat Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (Merger Sub), pursuant to the terms of an
Agreement and Plan of Merger, dated November 2, 2016 by and among Brocade, Ultimate Parent, Parent and Merger Sub:
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Employee All Hands Presentation distributed on November 28, 2016; and
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Edited Transcript of Employee All Hands Presentation Recording distributed on November 28, 2016 by Brocade.
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The items listed above were first used or made available on November 28, 2016.
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Employee All Hands Presentation distributed on November 28, 2016
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Acquisition Update
& 1H Expectations
© 2016 BROCADE COMMUNICATIONS SYSTEMS, INC. INTERNAL USE ONLY
Forward-Looking Statements
This communication,
and any documents to which Brocade refers you in this communication, contains not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements represent Brocades current expectations or beliefs concerning future events, including but not limited to the expected completion and timing of the proposed transaction, expected benefits and costs of the
proposed transaction, management plans relating to the proposed transaction, strategies and objectives of Brocade and Broadcom for future operations and other information relating to the proposed transaction. Without limiting the foregoing, the
words believes, anticipates, plans, expects, intends, forecasts, should, estimates, contemplate, future, goal,
potential, predict, project, projection, target, seek, may, will, could, should, would, assuming and
similar expressions are intended to identify forward-looking statements. You should read any such forward-looking statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ
significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and assumptions include, (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may
adversely affect Brocades business and the price of the common stock of Brocade, (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the
stockholders of Brocade and the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, (iv) the effect of the
announcement or pendency of the proposed transaction on Brocades business relationships, operating results and business generally, (v) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in
employee retention as a result of the proposed transaction, (vi) risks related to diverting managements attention from Brocades ongoing business operations (vii) the outcome of any legal proceedings that may be instituted against us
related to the merger agreement or the proposed transaction; (viii) unexpected costs, charges or expenses resulting from the proposed transaction, (ix) the ability of Broadcom to achieve its plans, forecasts and other expectations with respect to
Brocades business after completion of the proposed transaction; and (x) other risks described in Brocades and Broadcoms filings with the SEC, such as their respective Quarterly Reports on Form 10-Q and Annual Reports on Form
10-K. Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, Brocade does not assume any obligation
to update any such forward-looking statements whether as the result of new developments or otherwise.
©
2016 BROCADE COMMUNICATIONS SYSTEMS, INC. 2
Additional Information and Where to Find it; Participants in the Solicitation
This communication is being made in respect of the proposed transaction involving Brocade Communications Systems, Inc. (Brocade) and Broadcom Limited
(Broadcom). In connection with the proposed transaction, Brocade intends to file relevant materials with the Securities and Exchange Commission (the SEC), including a preliminary proxy statement on Schedule 14A.
Promptly after filing its definitive proxy statement with the SEC, Brocade will mail the definitive proxy
statement and a proxy card to each stockholder of Brocade entitled to vote at the special meeting relating to the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BROCADE ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT BROCADE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BROCADE AND THE PROPOSED
TRANSACTION. The definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the proposed transaction (when they become available), and any other documents filed by Brocade with the SEC, may be
obtained free of charge at the SECs website (http://www.sec.gov) or at Brocades website (http://www.brcd.com) or by contacting Brocades Investor Relations at (408) 333-6208 or scoli@brocade.com.
Brocade and its directors and executive officers may be deemed to be participants in the solicitation of proxies from
Brocades stockholders with respect to the proposed transaction. Information about Brocades directors and executive officers and their ownership of Brocades common stock is set forth in Brocades proxy statement on Schedule 14A
filed with the SEC on February 25, 2016, and Brocades Annual Report on Form 10-K for the fiscal year ended October 31, 2015, which was filed on December 22, 2015. Information regarding the identity of the potential participants, and their
direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the proposed transaction.
© 2016 BROCADE COMMUNICATIONS SYSTEMS, INC. 3
Acquisition Update
Focus Areas
IP Networking SAN Integration
Buyer Business Planning
We will continue to
provide updates as soon as we have details
© 2016 BROCADE COMMUNICATIONS SYSTEMS, INC. 4
1H Expectations
Standalone public company
until close
Aggressively drive our launch efforts
Continue to deliver excellence to our customers, partners and colleagues
Drive the integration planning process across all functional groups
© 2016 BROCADE COMMUNICATIONS SYSTEMS, INC. 5
Edited Transcript of Employee All Hands Presentation Recording distributed on November 28, 2016 by Brocade
So we were sending weekly updates. Well continue to do that. So we start at the very beginning, right? Because some of you have heard
Ive heard from some of you, again, why did we do it? This was not the outcome we had planned. We now have a product roadmap that is robust. Think about what we did over the last three-plus years. We had falling fibre channel revenue, and we
managed to grow IP revenue. Some organically, some inorganically through acquisition to offset the falling fibre channel revenue. No one thought we could do that four years ago. I mean, three years ago, people thought FCOE was going to kill fibre
channel. So kept the fibre channel business from tanking while we grew IP revenue. Acquisitions were made to product portfolio. Made the decision to get out of making our own ASICS for the IP business because we knew that wasnt competitive. We
now have those products rolling out the door. We did the router. Great software portfolio. So we were confident that we were on the right track. However, with a stock price being as depressed as it was, we had to listen to the offers that we had. So
thats why were here.
Were continuing the task of trying to find a buyer for the entire IP business. Im going to repeat myself
because some of this is already in the updates that I send out. But we have more interest in the IP business than we had in the entire Brocade. Why is that? Well, because a lot of people were afraid of the fibre channel business. So we had this good
offer come in for Brocade, we actually go and talk to people to make sure it was a fair offer. And the people we talked to there are, you know, a few people were interested in the entire Brocade. But everyone who was interested in the entire Brocade
have now come back and said, okay, we cant get the entire Brocade, but we want to get the IP business. We value the IP business. Why do they value the IP business? They see the investments weve made. They see that we are starting to
generate more and more revenue. We grew double-digit in all the IP segments when in some cases the market was growing single digits. So we have a strong IP business. And theyre interested in that. And everybody weve talked to is
interested in the entire IP business. And so we have the people who originally wanted to talk to all of Brocade who didnt get to buy Brocade, who have come back and said okay then I want to talk about the IP business of Brocade. And more
people have come onboard.
The people are in two categories. There is strategics. Those are people who have enterprise businesses that sell to large
enterprises, large carriers - theyre into the, you know, similar segment that we are in - the communication, compute storage business, selling to enterprises, that have common interests in buying our portfolio, because they see the value of
our portfolio. Another category of customers is private equity players. These are people who are just financial players. Venture capitalists who, you know, invest early stage and startups, and late stage sometimes. Private equity people buy
established businesses with established management teams. Theyre not interested unless there is a team to run it, because theyre bankers. They dont run businesses. Whereas, the contrast of a venture guy will get someone who
has a great idea. A lady with a great idea. A great engineer. A great idea. And theyll invest be the first investor. And they start trying to put a management team around that engineer, because they help to build management teams is
what they do in the venture world. Private equity world, they dont do that. Theyre just number crunchers. Heres what we do. We buy it. We buy the management team. We help you make it more efficient, because youre no longer a
public company. They have all the overhead being a public company. And we help you streamline it, and then you run it. You run it to money outcomes. Outcome of you get you know, you become public is one of the outcomes the private equity
guys going to run to. So we have private equity people who are interested. We have strategics who are interested. We hope that wed be done by last week with all the people interested. There are more people interested than we anticipated.
So we had meetings this morning. You see all the black limos outside, the black cars outside. Thats who those people are. We had meetings today. We have meetings tomorrow. We had meetings on Sunday. We had meetings starting it on Sunday
morning with people interested.
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The uncertainty is troubling for all of you, I know. And even on the SAN side theres uncertainty how the
structures are and who is going where. So its not lost on me and the management team that we need to get this done sooner rather than later. It is our number one task. There are no more hours in the day for us to do this. I mean, were
seven days a week; 24 hours a day. Were fully available. Fully accessible. I mean, we have whoever we need is here 7/24 getting this done, because we realize the importance of getting this done. And it is our number one job. And the number one
thing you should know is, we have a lot of interest. We couldve been sitting here wringing our hands, oh, nobody wants us. The problem is the inverse. We have too many people who want it. And so now its like, you know, lets go
figure out how to sort this thing out and get the right home for the IP assets. So thats kind of the path were on.
And well continue to
put the updates out as soon as we have them. So expectations for the first half. We have new comp plans getting out for the sales force with accelerators for Q1. For Q2 weve got people focus on selling. So the sooner we get that done for those
customers, the better it is. But we have to keep executing. As difficult as it is, with the uncertainty.
And again, for myself. For my senior team.
Talking about myself, initially. Again, not the outcome I wanted. I mean, this is going to be we had the right strategy and the right plan but we have to work with what we have, right? And so we have to keep the trains leaving on time. On the
SAN side and the IP side as best possible because that is a part of the value that were now trying to communicate to buyers. So its real important that we continue to ship the products. I mean, theres a lot of hardware coming down
the pike out of Jasons world. The new switches. The top of shelf routers. Theres products coming out of Dan Rs world on the wireless side, out of the software team. We have to, have to keep delivering the products because
thats the value that were projecting that were going to be passing on to whoever buys those assets. So going to aggressively drive the launch efforts. And I think youll see us even position earlier than normal some of the
products were shipping. Which is letting people know were in business. And we have incentives for our channel partners just rolled out last week for our channel partners could see theyre buying the products, and can position our
products. And so, you know, this is as much as there is you know, a lot of background noise, we have to keep pushing through this. All right.
So
well do Q&A.
Q: So what are the plans for BIP for first half 17?
Lloyd: The plans for BIP first half 17 is that were going to pay out at a hundred percent, because its almost impossible to set goals the
way this is right now. And if something were to happen that someone wasnt here, wed do it prorated. So the plan is hundred percent BIP payout. Keep your heads down. Keep performing.
Q: Will selling the IP business to private equity save more jobs for current support positions at Brocade?
Lloyd: Will some of the IP business be better for jobs for Brocadians? It depends. You know, there are strategics who value exactly what we have. They have
nothing of what we have. And they want to keep everything we have. There are strategics who, you know, the way they align products, maybe not. The PE guys would be the same as a strategic who wants everything that we have. Thats the best way
Id say it.
Q: Can Ruckus employees participate in BIP?
Lloyd: They already do. The question is, does Ruckus employYeah, they do. Yeah, absolutely.
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Q: Is there an earliest date that the acquisition could close?
Lloyd: Well, we have said second half of the year to be careful. So its within the first half. Thats kind of the earliest date. People expect
because, again, you have to go through all the agency approvals, and government and international agency approvals. As well as antitrust things, and so on. So six months is usually like a safe time to think about when you might earliest get
there. So, you know, thats kind of a ballpark.
Q: Can you share with us, as youre looking through all the bidders, what kind of factors other
than price of course that you consider?
Lloyd: Looking through all the bidders, besides price, deal certainty is important so we can get the deal done,
because the uncertainty that we have now, I dont want myself or you to have to go through that again. And I tell you that going through the process, there are people looking at us who really do value what we have. And sometimes we talk about
the software business. We havent gotten the revenue that wed expect in a software business. And some of the best interest is in the software business. So it goes to the point of we have to keep executing. We have to keep delivering the
products because its a whole part of what people are looking at is, you know, our ability to execute and make the trains leave on time. And people really are valuing. They realize there are people who are interested in us because, strangely
enough, we havent fully shipped all the new commodity based silicon as yet. Because they see an inflection point coming, because theyve looked at the data and theyve see every time weve shipped a new system, our sales have
increased. Every time we shipped a new blade, our sales have increased. So theyre looking at and theyre realizing that as we ship these products, and you go back over four or five years, every time theres a new product our sales go
up. And they do that kind of calculus. They look back and look at the trends. And they go, yep. You shipped this here. I know the revenue is going to go up because thats whats happened the last three times you did something like that.
And so that predictability weve had in the past is really serving us well right now.
You know, we are part of something really special here. We
have skills that are valuable. We have products that are valuable. And this Thanksgiving Im going to take the time to sit back and spend a day not doing any work, and just reflect and enjoy some friends and family. And I encourage all of you
to do the same thing. So happy Thanksgiving, and Ill keep the information coming and keep the updates going, okay? Take care.
Additional
Information and Where to Find It
This communication is being made in respect of the proposed transaction involving Brocade Communications Systems,
Inc. (Brocade) and Broadcom Limited (Broadcom). In connection with the proposed transaction, Brocade intends to file relevant materials with the Securities and Exchange Commission (the SEC), including a
preliminary proxy statement on Schedule 14A. Promptly after filing its definitive proxy statement with the SEC, Brocade will mail the definitive proxy statement and a proxy card to each stockholder of Brocade entitled to vote at the special meeting
relating to the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BROCADE ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION THAT
BROCADE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BROCADE AND THE PROPOSED TRANSACTION. The definitive proxy statement, the preliminary proxy statement and other relevant materials in
connection with the proposed transaction (when they become available), and any other documents filed by Brocade with the SEC, may be obtained free of charge at the SECs website (http://www.sec.gov) or at Brocades website
(http://www.brcd.com) or by contacting Brocades Investor Relations at (408) 333-6208 or scoli@brocade.com.
3
Participants in the Solicitation
Brocade and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Brocades stockholders with respect
to the proposed transaction. Information about Brocades directors and executive officers and their ownership of Brocades common stock is set forth in Brocades proxy statement on Schedule 14A filed with the SEC on February 25,
2016, and Brocades Annual Report on Form 10-K for the fiscal year ended October 31, 2015, which was filed on December 22, 2015. Information regarding the identity of the potential participants, and their direct or indirect interests
in the proposed transaction, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with SEC in connection with the proposed transaction.
Legal Notice Regarding Forward-Looking Statements
This
communication, and any documents to which Brocade refers you in this communication, contains not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements represent Brocades current expectations or beliefs concerning future events, including but not limited to the expected completion and timing of the proposed transaction, expected benefits and costs
of the proposed transaction, management plans relating to the proposed transaction, strategies and objectives of Brocade and Broadcom for future operations and other information relating to the proposed transaction. Without limiting the foregoing,
the words believes, anticipates, plans, expects, intends, forecasts, should, estimates, contemplate, future, goal,
potential, predict, project, projection, target, seek, may, will, could, should, would, assuming and
similar expressions are intended to identify forward-looking statements. You should read any such forward-looking statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ
significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and assumptions include, (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which
may adversely affect Brocades business and the price of the common stock of Brocade, (ii) the failure to satisfy any of the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the
stockholders of Brocade and the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, (iv) the effect of
the announcement or pendency of the proposed transaction on Brocades business relationships, operating results and business generally, (v) risks that the proposed transaction disrupts current plans and operations and the potential
difficulties in employee retention as a result of the proposed transaction, (vi) risks related to diverting managements attention from Brocades ongoing business operations (vii) the outcome of any legal proceedings that may be
instituted against us related to the merger agreement or the proposed transaction; (viii) unexpected costs, charges or expenses resulting from the proposed transaction, (ix) the ability of Broadcom to achieve its plans, forecasts and other
expectations with respect to Brocades business after completion of the proposed transaction; and (x) other risks described in Brocades and Broadcoms filings with the SEC, such as their respective Quarterly Reports on Form 10-Q
and Annual Reports on Form 10-K. Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by reference in this document. Except as required by applicable law or regulation, Brocade does not
assume any obligation to update any such forward-looking statements whether as the result of new developments or otherwise.
4
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