Extreme Networks is set to acquire Brocade Communications Systems, Inc.’s data center switching, routing, and analytics business from Broadcom for $55 million in cash.
Extreme said it expects the acquisition to be accretive to cash flow and earnings for its fiscal year 2018 and expects to generate over $230 million in annualized revenue from the acquired 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,” said Ed Meyercord, president and CEO of Extreme Networks.
Earlier, Extreme Networks announced its decision to bid for Avaya’s networking business. Extreme expects the Avaya business to generate over $200 million in annualized revenue.
Recently, Extreme Networks acquired Zebra’s wireless LAN business, which is expected to generate over $115 million in annualized revenue.
Given the profitability of Brocade’s data center business, this transaction will accelerate Extreme’s aim to achieve gross margins in excess of 60 percent.
“Extreme is highly complementary to our data center switching, routing, and analytics business on many levels, and represents a positive outcome for our customers, partners, and employees,” said Lloyd Carney, CEO of Brocade.
Chipset major Broadcom is in the process of completing the acquisition of Brocade.