Furthering its move into the wireless service sector, Arris on Friday announced the closure of its acquisition of the Ruckus Wireless and ICX Switch businesses from Broadcom.
Closure of the $800 million deal was contingent on Broadcom’s $5.5 billion merger with Brocade Systems, which owned Ruckus and ICX. The Brocade acquisition was originally set to wrap up in July but finally closed two weeks ago following months of delays.
Dan Rabinovitsj, the previous COO of Ruckus Wireless, is now president of Arris’ new Enterprise Networks business segment. Ruckus Networks, an Arris company, as it’s now called, will operate as a dedicated business under the Enterprise Networks unit.
About 1,700 Ruckus Wireless and ICX Switch employees are joining Arris as part of the deal.
Arris intends to leverage Ruckus’ assets to extend its offerings in converged wired and wireless networking technologies beyond the home, including into the education, public venue, enterprise, hospitality and MDU markets. Ruckus’ early development work on small cell CBRS LTE products also presents an opportunity to deploy converged WiFi and LTE using common cloud-based control and management capabilities, according to Arris.
“This combination underscores our shared vision of achieving market leadership across wireless and wired networks in close partnership with our valued customers and channel partners,” Rabinovitsj said in a statement. “We’re very excited about the collaboration opportunities across our product portfolios to enable connectivity from the office to the home and to all the places in between. Joining ARRIS means we still do what Ruckus does best, but on a larger, global scale.”
After Broadcom closed on Brocade last month, BTIG Research analyst Walter Piecyk wrote that Ruckus could be “a transformational acquisition that will help return Arris to organic growth despite the obvious challenges for set-top boxes.”
“We are increasingly optimistic about the new revenue opportunities available to Ruckus based on the broadening interest in 3.5 GHz spectrum as an early 5G building block for cable, wireless and even technology companies,” Piecyk noted. “In addition, we believe Ruckus’ legacy enterprise WiFi business has stabilized after the weakness created by the disruption from Brocade. Finally, Arris strong free cash flow will enable it to retire at least 20 percent of its share count over the next two years, if the stock does not adequately respond to its return to growth in 2018.
Arris is set to hold a conference call on Dec. 14 to provide an update on Ruckus Networks.
“Ruckus’ unmatched expertise in wireless and wired networking perfectly complements our growth strategy of driving towards a constantly connected, mobile future,” said Arris CEO Bruce McClelland. “The acquisition brings diversification to our portfolio, building on our strength in networking and helping us to serve new verticals. Ultimately, our combined portfolios and scale will help our customers and partners deliver a smart, simple connected world for billions of people.”
