When Broadcom announced plans to acquire Brocade, it was contingent upon divestiture of the assets from Brocade’s recent acquisition of Ruckus Wireless. Arris’ name had been circling the rumor mill for a while as a possible suitor, so it’s not too surprising. I was a little interested to see the price. At $800 million, it seems like a pretty good deal for Arris.
Consider that when Brocade bought Ruckus about 10 months ago, they paid $1.5 billion. This isn’t so much of a concern for Broadcom in the long run, their purchase price of Brocade clearly took this into account. But a 45% dip in value is nothing to sneeze at either.
Overall, I’m glad to see the Ruckus Wireless team staying intact. There was some speculation that the assets would be sold for parts. Arris might not be the most exciting place for them to land, but it’s eminently sensible.
PR Newswire comments:
ARRIS International plc, (NASDAQ: ARRS) and Broadcom Limited (NASDAQ: AVGO) today jointly announced that they have entered into an agreement for ARRIS to acquire Brocade Communication Systems Inc.’s Ruckus Wireless and ICX Switch business for cash consideration of $800 million, plus the additional cost of unvested employee stock awards, following the closing of Broadcom’s acquisition of Brocade. ARRIS expects the acquisition to be accretive to its Non-GAAP earnings per share in the first 12 months.