The acquisition will take place once Broadcom takes over all of Brocade for $5.9 billion.
Extreme Networks and Broadcom Ltd have entered into an agreement that sees the former acquiring Brocade Communications Systems Inc’s data centre switching, routing, and analytics business from Broadcom. Late last year, Broadcom had announced that it is in the process of acquiring all of Broadcom for roughly $5.9 billion. Once the entire $5.9 billion deal goes through (expected to conclude by July 30, 2017), Extreme will buy off Brocade’s data centre networking business for $55 million.
There was a time when American technology company Brocade was second only to Cisco Systems in the storage networking business. However, that has changed. The business is now being split into pieces and Broadcom is selling it off bit by bit. Prior to this, Broadcom sold off Brocade’s Ruckus Wireless Wi-Fi business to Arris International for $800 million, and now there’s news of the data centre sale.
Extreme excepts the deal to increase its revenues to over $1 billion for the 2018 fiscal year (beginning July 1), as the Brocade deal, once approved, will bring in over $230M in revenue. Besides this, Extreme also recently bid on Avaya’s networking business, one that is expected to generate around $200 million in revenues if it wins the bid, making it the most rapidly growing networking business in the world.
Broadcom, on the other hand, will assimilating Brocade’s fibre channel storage-area networking (SAN) switching products into its own repertoire. But it is looking to sell off Brocade’s IP (internet protocol) networking business, possibly to Wi-Fi modem manufacturer Arris.
President and CEO of Extreme Networks Ed Meyercord said that the steps taken by the company in the past year have now helped it acquire a complete data centre, along with a core, campus and edge networking portfolio. The latest deal will add to that a host of things from Brocade, like its MLX, VDX, and SLX switches, as well as its Virtual Router, Virtual Application Delivery Controller, and SDN Controller packages.
In October last year, Extreme had also finalised its purchase of Zebra Technology Corporation’s wireless LAN business, which is further estimated to rake in more than $115 million in revenue. This is latest in the line of acquisitions made by Extreme over the last six months, and the Brocade deal shows the company is aggressively trying to expand and develop its niche set of specialisations.