Ruckus Wireless has agreed to be acquired by video and broadband hardware maker Arris, following weeks of rumors and negotiations. Arris will buy the Wi-Fi equipment maker for $800 million in cash, plus the additional cost of unvested employee stock awards.
Less than one year ago Ruckus was bought by Brocade Communications for $1.2 billion, net of cash on Ruckus’s balance sheet. When Brocade made its offer, Ruckus had a market value of roughly $900 million and had about $300 million in cash.
Just a few months after buying Ruckus, Brocade agreed to be acquired by chipmaker Broadcom, (formerly Avago). Ruckus competes with several of Broadcom’s customers, so Broadcom decided to sell Ruckus along with Brocade’s network switch business.
“Arris has been absolutely determined and enthusiastic from the first day that we announced,” said Ruckus COO Dan Rabinovitsj. “There has been a ton of interest in this business … and there was a whole bunch of activity around this.”
One source told RCR Wireless News that three different private equity firms wanted to invest in Ruckus and that a deal fell through at the last minute when the parties could not agree on terms. Nonetheless, Rabinovitsj described the Arris deal as a “happy ending” for Ruckus.
“It’s a great conclusion to the long process because they know our business, they understand it and for them this is kind of transformational, so it’s a really good place for us to end up,” Rabinovitsj said.
Ruckus and Arris share a number of customers, most notably cable network operators. Arris primarily sells equipment for use inside homes, while Ruckus sells Wi-Fi gear for use in both public-facing Wi-Fi networks and enterprises. These are markets that Arris wants to penetrate.
“The next five years will see exciting changes as every service provider will become a wireless operator of some fashion,” said Arris CEO Bruce McClelland. “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.”
Rabinovitsj said Arris would also be able to leverage Ruckus’s relationships with mobile network operators, noting Ruckus is entering the LTE market by developing products designed to operate in the unlicensed citizens band radio spectrum at 3.5 GHz.
“We were a founding member of the CBRS Alliance,” said Rabinovitsj. “It stared with Ruckus, Qualcomm and Google and … now that’s expanded to include Verizon, AT&T, Comcast, Charter and a number of other infrastructure companies. We’re firmly committed to that and we’re continuing to demonstrate products. We’ve been doing trials all year.”
After the deal closes, Rabinovitsj will head up a wireless networking and wired switching business within Arris. Selina Lo, founder and CEO of Ruckus, will follow through on her existing plan to retire in May, Rabinovitsj said.
The Arris/Ruckus deal is contingent upon Broadcom closing its acquisition of Brocade, a transaction which Rabinovitsj said is proceeding smoothly. Broadcom expects to close before the end of July.
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