Network and data storage company Brocade Communications Systems on Monday said it has signed a $1.2 billion deal to acquire wireless infrastructure company Ruckus Wireless.
As part of the agreement, Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each share of Ruckus common stock. Brocade said it will fund the cash portion of the transaction through a combination of cash on hand and financing.
According to Brocade CEO Lloyd Carney, the acquisition will help Brocade build a new kind of networking company and position it to provide edge services as the industry moves toward 5G and the Internet of Things.
“This strategic combination will position us to expand our addressable market and technology leadership with Ruckus’ fast-growing wireless LAN products, and supports our vision to deliver market-leading New IP solutions that enable the network to become a platform for innovation,” Carney said. “We believe that combining our portfolios will provide significant benefits to our customers and will enable us to accelerate our growth and value creation.”
Ruckus CEO Selina Lo said the deal will also help accelerate cross-selling opportunities for the two companies, which already have a strong history of partnership.
Following its acquisition, Ruckus will operate as a new business unit within Brocade that will report to Carney. Ruckus will retain Lo as head of the unit, Brocade said.
The combined company will bring in annual revenue of nearly $2.4 billion and employ nearly 6,000 people.
Brocade said it expects to close the transaction during its fiscal third quarter.
Brocade investors reacted poorly to the news, on Monday, with stocks falling 13.71 percent by 12:20 p.m. ET. Ruckus stock, however, surged, rising more than 31 percent on the deal.