SAN JOSE, Calif. and
SINGAPORE, March 29, 2017 /PRNewswire/
-- Extreme Networks, Inc. (NASDAQ: EXTR) and
Broadcom Limited (NASDAQ: AVGO) today jointly announced that they
have entered into an agreement for Extreme to acquire Brocade
Communications Systems, Inc.'s data center switching, routing, and
analytics business from Broadcom following Broadcom's acquisition
of Brocade. 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.
Extreme expects the acquisition to be accretive to cash flow and
earnings for its fiscal year 2018 and expects to generate over
$230 million in annualized revenue
from the acquired assets. The acquisition is expected to close
within 60 days following the closing of Broadcom's acquisition of
Brocade.
"The addition of Brocade's data center networking business
significantly strengthens our position in the expanding high-end
data center market and reinforces our strategy of delivering
software-driven networking solutions focused on enterprise
customers," said Ed Meyercord,
President and CEO of Extreme Networks. "As Extreme is the only
pure-play end-to-end, wired and wireless enterprise IP networking
company in the world, we believe Brocade's data center customers
will benefit from our dedication to delivering high-quality,
software-driven, secure networking solutions and the industry's
highest rated customer support. Today's announcement, coupled with
our recent announcements regarding our position as the stalking
horse bidder of Avaya's networking business and the successful
completion of the integration of Zebra's wireless LAN business,
along with Extreme's organic investments in R&D, will result in
a state-of-the-art, newly-refreshed portfolio of enterprise
solutions for our customers.
"Moreover, this acquisition is important as it expands our
commercial relationship with Broadcom," continued Meyercord. "We
already have our 200 Series of value oriented switches leveraging
Broadcom's FASTPATH operating system software and this transaction
will only broaden our strategic partnership. Finally, given
the strong profitability of Brocade's data center business, this
transaction will accelerate Extreme's objective to achieve gross
margins in excess of 60%."
"Extreme is highly complementary to our data center switching,
routing, and analytics business on many levels, and represents a
positive outcome for our customers, partners, and employees," said
Lloyd Carney, CEO of Brocade. "Our
two companies have similar strategic visions and believe that
innovation will increasingly be driven through software
capabilities that allow customers to successfully transform their
networks for digital business. Both companies are pure-play
networking providers, serving the enterprise edge to the data
center core. And both companies consistently demonstrate a
customer-first culture, placing a high value on excellence in
customer and partner support. In addition, we believe Extreme's
desire to build on the innovation and momentum of our completely
refreshed data center portfolio, including the new SLX family, as
well as its intention to drive the ongoing success of our VDX and
MLX families, will allow our customers and partners to continue to
leverage the full benefits of our world-class portfolio."
This announcement is the latest in a series of acquisitions that
Extreme has announced over the last six months to expand the
company's state-of-the-art portfolio of data center, core, campus
and edge networking solutions. In October 2016, the company closed its acquisition
of the wireless LAN business from Zebra Technology Corporation,
which is expected to generate over $115
million in annualized revenue. Earlier this month, the
company announced that it entered into an agreement with Avaya Inc.
to be the stalking horse bidder to acquire its networking business
in an auction process. The transaction remains subject to customary
closing conditions and regulatory approvals and is currently
anticipated to close within 2 to 3 months. Extreme expects the
Avaya business to generate over $200
million in annualized revenue.
Terms of the Transaction
The closing of the
transaction is contingent on Broadcom closing its acquisition of
Brocade, previously announced on November 2,
2016 and approved by Brocade shareholders on January 26, 2017. Broadcom presently expects to
close the Brocade acquisition in its third fiscal quarter ending
July 30, 2017. Extreme expects
to fund the transaction with funds resulting from an anticipated
amendment increasing its existing credit facility.
The transaction is subject to customary closing conditions,
including certain regulatory approvals, but does not require
shareholder approval by either company, is not subject to any
financing conditions, and is presently expected to close
approximately 60 days following the closing of Broadcom's
acquisition of Brocade. Extreme will file a Current Report on Form
8-K with the Securities and Exchange Commission providing further
details regarding the terms of the transaction.
Conference Call
Extreme Networks will host a
conference call at 4:30 p.m. Eastern
/ 1:30 p.m. Pacific today to discuss
this announcement. The conference call will be available to the
public through a live audio web broadcast via the Internet at
http://investor.extremenetworks.com. The conference call may also
be heard by dialing 1-877-303-9826 (international callers dial
1-224-357-2194). The encore recording will be available until
April 5, 2017 and can be accessed by
dialing (855) 859-2056 or international 1 (404) 537-3406 with the
conference ID # 97360078.
About Extreme Networks
Extreme Networks,
Inc. (EXTR) delivers software-driven networking solutions that
help IT departments everywhere deliver the ultimate business
outcome: stronger connections with customers, partners and
employees. Wired to wireless, desktop to data center, on premise or
through the cloud, we go to extreme measures for our customers in
more than 80 countries, delivering 100% insourced call-in technical
support to organizations large and small, including some of the
world's leading names in business, hospitality, retail,
transportation and logistics, education, government, healthcare and
manufacturing. Founded in 1996, Extreme is headquartered
in San Jose, California. For
more information, visit Extreme's website or call
1-888-257-3000.
Extreme Networks and the Extreme Networks logo are either
trademarks or registered trademarks of Extreme Networks,
Inc. in the United States and/or other
countries. Other trademarks are the property of their
respective owners.
About Broadcom
Broadcom Limited (NASDAQ: AVGO) is a
leading designer, developer and global supplier of a broad range of
analog and digital semiconductor connectivity solutions. Broadcom
Limited's extensive product portfolio serves four primary end
markets: wired infrastructure, wireless communications, enterprise
storage and industrial & other. Applications for our products
in these end markets include: data center networking, home
connectivity, broadband access, telecommunications equipment,
smartphones and base stations, data center servers and storage,
factory automation, power generation and alternative energy
systems, and displays. Broadcom is co-headquartered in Singapore and San
Jose, Calif. For more information about Broadcom please
visit http://www.broadcom.com.
Forward Looking Statements
Except for the historical
information contained herein, the statements in this release,
including those concerning the transaction, the expected benefits
and the timing of closing, are "forward-looking statements" within
the meaning of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements speak only as of the date of this release. Actual
results or events could differ materially from those anticipated in
those forward-looking statements as a result of certain factors,
including: the possibility that proposed acquisition of Brocade by
Broadcom will not be completed and the possibility that the
proposed acquisition of Brocade's data center switching,
routing, and analytics business by Extreme from Broadcom will not
be completed, whether as a result of the failure to obtain
necessary regulatory approvals, to satisfy any of the other
conditions to the transactions or otherwise; failure to achieve
targeted revenues and forecasted demand from end customers; a
highly competitive business environment for network switching
equipment; the possibility that we might experience delays in the
development or introduction of new technology and products;
customer response to our new technology and products; unexpected
integration issues; overall conditions in the industry and a
dependency on third parties for certain components and for the
manufacturing of our products.
More information about potential factors that could affect
Extreme's business and financial results is included in Extreme's
filings with the U.S. Securities and Exchange Commission,
including, without limitation, under the captions: "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Risk Factors". Except as required under the
U.S. federal securities laws and the rules and regulations of the
U.S. Securities and Exchange Commission, Extreme Networks disclaims
any obligation to update any forward-looking statements after the
date of this release, whether as a result of new information,
future events, developments, changes in assumptions or
otherwise.
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SOURCE Extreme Networks, Inc.