ARRIS and Broadcom jointly announced an agreement whereby the former will acquire Ruckus Wireless and ICX Switch business from Broadcom subsidiary Brocade Communication System Inc. for $800 million in cash, as well as unvested employee stock awards. The deal is contingent upon Broadcom successfully completing the acquisition of Brocade Communications, which owns both ARRIS’ acquisition targets.
Acquiring Ruckus and ICX Switch will further expand ARRIS’s presence in wired and wireless networking technology and markets beyond the home to encompass the education, public venue, enterprise, hospitality and MDU market segments, ARRIS highlights in a news release.
Off the back of acquiring Ruckus and the ICX Switch business line, management intends to create a business unit dedicated to marketing innovative wireless networking and wired switching technology that can meet the needs of various industry sector verticals. The new business unit is to be led by Ruckus COO Dan Rabinovitsj.
Seizing on a Wireless Future
ARRIS previously acquired Motorola and Pace. “We’ve set an aggressive growth strategy for ARRIS that includes expanding our technology breadth and depth with a focus on wireless broadband,” CEO Bruce McClelland wrote in a company blog post.
“This strategy will also take us beyond the home – and into new, adjacent markets. The acquisition accomplishes all of these goals, expanding our focus into the enterprise networking and wireless spaces, as well as augmenting our portfolio of products serving our existing and emerging customers.
Beyond their deep Wi-Fi access roots, Ruckus is developing a novel approach to developing technology that delivers very high-bandwidth cellular service of particular interest to both mobile and fixed-line broadband service providers, McClelland points out. Assimilating Ruckus will boost those efforts and enable the combined company to gain a market leading position by introducing next-gen wireless networking tech that continues to blur the lines distinguishing wireline and wireless network operators, he continued.
“We are building upon our successful history of making investments that significantly grow our business and create value for our customers, employees, shareholders and partners,” McClelland writes. “Driven by ever-growing demand for high-speed, reliable, and effortless connectivity, service providers and enterprises will continually invest in their wired and wireless networks.
“The next five years will see exciting changes as every service provider will become a wireless operator of some fashion. Enterprises and venues will upgrade their broadband networks to provide new innovative value-added services and faster, more seamless internet access.
Next for Broadcom
Besides a healthy boost to its cash balance, selling Ruckus and ICX Switch will allow Broadcom to focus more resources and energy on integrating Brocade’s Fibre Channel SAN business, a development that will have to wait for regulatory approval of Broadcom’s proposed acquisition of Brocade in several jurisdictions, as well as compliance with various other transaction terms and conditions.
So will the sale and purchase of Ruckus and ICX Switch. Transaction closing does not require shareholder approval by either company and isn’t subject to any financing conditions, which simplifies matters and should speed up the process significantly, the two companies point out. It is contingent upon the successful closing of Broadcom’s Brocade acquisition, however.
Brocade shareholders approved the deal to sell the company to Broadcom on Jan. 26. Broadcom anticipates deal closing in its fiscal 3Q this year, which ends July 30.
All things considered, ARRIS’ acquisition is expected to close about one month following the closing of Broadcom’s acquisition of Brocade.