In a time when so many tech mergers fall apart before they even reach the definitive agreement stage, it's worth noting that network equipment maker Brocade Communications Systems Inc. [
BRCD] on Friday
closed its $2.6 billion acquisition of Foundry Networks Inc. [
FDRY].
It was a rocky road to closing. The transaction was
announced way back in July, well before everything hit the fan. As a testament to how much both companies wanted the deal to close, in October they renegotiated deal terms,
shaving $400 million off of the original $3 billion price tag.
Despite the lowered deal value, it remains to be seen whether Brocade will be justified in paying what many considered a high price for Foundry. Back in August we
talked with Brocade's head of corporate development T.J. Grewal, who told us that acquiring Foundry would make the enlarged company a viable option for enterprises' end-to-end networking equipment needs. He didn't utter the name Cisco Systems Inc. [
CSCO], but that's who Brocade is gunning for.
The deal is also about accelerating revenue growth by joining Brocade's data storage expertise with Foundry's Ethernet technology, and offering a solution at a lower price-point, as CEO Mike Klayko (pictured) lays out in a
YouTube video released today.
If the integration is handled as carefully as Grewal said it will be, Brocade could be well-armed to do battle for enterprises' data centers once companies start spending again.
-- Olaf de Senerpont Domis See Dec. 19 press release from BrocadeSee Dec. 19 Brocade YouTube video page See Oct. 30 post on new Brocade-Foundry deal terms from Tech ConfidentialSee Aug. 8 interview with T.J. Grewal from Tech Confidential
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