Brocade Communications has agreed to buy Ruckus Wireless in a deal worth $1.2 billion, which the companies say will create a “pure-play networking company.” The goal is to deliver products and solutions that span the continuum from the heart of the data center to the edge of the network. Brocade sells routers and switches and is focused on storage area networking, software-defined networking and network functions virtualization. Ruckus sells Wi-Fi access points and routers and is focused on cloud-controlled service provider Wi-Fi solutions.
Ruckus Wireless, which went public less than four years ago, saw its stock price soar more than 30% on the news. Ruckus shareholders are set to receive 0.75 Brocade shares and $6.45 in cash for each share of Ruckus stock they own. Shares of Brocade slipped more than 14% this morning. The value of the deal will fluctuate until closing based on the price of Brocade’s stock.
Brocade said the combined company will be the market leader in storage area networking, service provider Wi-Fi and hospitality Wi-Fi. The company also said it is not planning any immediate changes to the sales and service channels.
“We operate in adjacent segments of the larger networking market with a number of common customers for our complementary products, and have a successful track record of working together,” said Ruckus CEO Selina Lo in a statement.
The “Internet of Things” and “5G” mobile services are two of the biggest opportunities for the combined company, according to Brocade CEO Lloyd Carney. Carney also named technology for in-building wireless and LTE/Wi-Fi convergence as motivations for the merger. Carney and Ruckus CEO Seina Lo said in a statement the integration of Wi-Fi and the use of shared access or lightly licensed spectrum are critical to meeting the ever-growing demand for coverage, capacity and consistency required for next-generation mobile services.
The merger could have implications for one of the technologies that brings Wi-Fi and LTE together, and for the LTE small cell market. Ruckus has been a major supporter of LTE Wi-Fi link aggregation, a technology developed by Alcatel-Lucent before it became part of Nokia. Alcatel-Lucent saw Ruckus as a path to market for its LTE small cell solutions, but now Ruckus will be owned by one of Alcatel-Lucent’s top competitors in the market for switches and routers.
The union of Brocade and Ruckus could also create a stronger competitor to Cisco, the world’s biggest vendor of enterprise networking gear. Cisco has worked hard to build its Wi-Fi portfolio, and paid $1.2 billion dollars for Wi-Fi access point maker Meraki in 2012, the same year Ruckus went public.
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