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Extreme Networks to acquire Aerohive for $210 million

Wi-Fi provider Extreme Networks is buying Aerohive for $210 million, bringing some consolidation to the Wi-Fi market as the industry starts to ramp toward Wi-Fi 6 adoption and bolstering the company’s addressable market with software-defined wide area networking capabilities and a subscription-service-oriented strategy.

Extreme will buy all of the outstanding shares of Aerohive for $4.45 per share in cash, which will put the aggregate purchase price at about $272 million — but accounting for Aerohive’s cash balance of $62 million, deal is equivalent to a value of $210 million.

“We are now taking the next step to transform our business to add sustainable, subscription-oriented cloud-based solutions that will enable us to drive recurring revenue and improved cash flow generation,” said Ed Meyercord, president and CEO of Extreme Networks.

“At a time when many of Extreme’s customers and partners are turning toward as-a-service/subscription models to reduce costs and gain efficiencies, Aerohive will expand Extreme’s mix of revenues to approximately 30% from subscription recurring revenue,” the company said.

Extreme added that the acquisition “will add critical cloud management and edge capabilities to Extreme’s portfolio of end-to-end, edge-to-cloud networking solutions” as well as “a strong subscription revenue stream and strengthen Extreme’s position in wireless LAN at a critical technology transition to Wi-Fi 6.” Extreme said it would also gain new automation and intelligence capabilities and expand its technology leadership in Wi-Fi and add cloud-based Network Access Control to its on-premise NAC portfolio.

“The acquisition of Aerohive establishes our leadership in cloud, [artificial intelligence], and [machine learning], adding a proven and mature cloud services platform and subscription service model for Extreme’s customers and partners,” said Meyercord. “Extreme continues to invest in software and AI to expand the automation capabilities across our portfolio of edge-to-cloud networking solutions. The ability to improve user experiences, lower operating expenses, and deliver cloud-managed networks is key to our strategy.”

The boards of both companies have approved the transaction, which is expected to close is expected to close in Extreme’s first fiscal quarter of 2020.

Extreme noted that Aerohive’s global footprint includes 30,000 cloud wireless LAN customers across a variety of verticals, and that the company recently delivered a trio of Wi-Fi 6 access points. 

Aerohive also brings SD-WAN capabilities that Extreme said would expand its addressable market by $1 billion in a fast-growing market.

Customers of the merged company “will be able to mix and match a broader array of software, hardware, and services elements to create networks that support their unique needs and that may be managed and automated from end-to-end – from the enterprise edge to the cloud – to advance their digital transformation efforts,” Extreme said.

David Flynn, president and CEO of Aerohive, called the acquisition a “major milestone for Aerohive.”

“The role that cloud-managed technology plays in modern enterprises is impossible to overstate – it is where digital transformation is won and lost,” Flynn said, adding that Aerohive’s cloud management and edge technology expertise, along with Extreme’s solutions and “continued investment in software and AI for automation” will “push networking into a new era – making infrastructure smarter, more autonomous, and the driver of business value.”

ABOUT AUTHOR

Kelly Hill
Kelly Hill
Kelly reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr