Continuing to arrange homes for the parts of Brocade Communications Systems Inc. it won't want, Broadcom Ltd. (NASDAQ: AVGO) says it has reached agreement to sell the data center switching, routing, and analytics business of its pending acquisition to Extreme Networks, Inc. (NASDAQ: EXTR). Extreme Networks will pay $55 million in cash, consisting of $35 million at closing and $20 million in deferred payments, as well as additional potential performance-based payments to Broadcom, to be paid over a five-year term. The deal, of course, is contingent upon Broadcom closing the acquisition of Brocade it announced last November.
The deal is expected to close within 60 days after Broadcom closes the Brocade acquisition. Extreme expects the acquisition will prove accretive to cash flow and earnings for its fiscal year 2018 and expects to generate more than $230 million in annualized revenue from the new assets.
"The addition of Brocade's data center networking business significantly strengthens our position in the expanding high-end data center market and reinforces our strategy of delivering software-driven networking solutions focused on enterprise customers," explained Ed Meyercord, president and CEO of Extreme Networks. "As Extreme is the only pure-play end-to-end, wired and wireless enterprise IP networking company in the world, we believe Brocade's data center customers will benefit from our dedication to delivering high-quality, software-driven, secure networking solutions and the industry's highest rated customer support. Today's announcement, coupled with our recent announcements regarding our position as the stalking horse bidder of Avaya's networking business and the successful completion of the integration of Zebra's wireless LAN business, along with Extreme's organic investments in R&D, will result in a state-of-the-art, newly refreshed portfolio of enterprise solutions for our customers."
Broadcom agreed this past February to sell Brocade's Ruckus Wireless and ICX Switch operations to ARRIS.
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