Brocade Communications Strikes $1.2 Billion Deal for Ruckus Wireless
April 04 2016 - 10:20AM
Dow Jones News
Brocade Communications Systems Inc. agreed to buy Ruckus
Wireless for about $1.2 billion, expanding Brocade's
wireless-products footprint in the service-provider industry.
Brocade's stock fell 13% to $9.22 in morning trading in New
York, while Ruckus shares soared 31% to $13.14.
Under the terms of the agreement, Ruckus stockholders will
receive $6.45 in cash and 0.75 shares of Brocade for each share of
Ruckus. Based on the closing price of Brocade's stock Friday, the
transaction values Ruckus at a price of $14.43 a share, or about
$1.5 billion when taking the estimated cash acquired into
account.
The transaction price may fluctuate until close, the companies
said.
The companies expect the tie-up to accelerate cross-selling
activities into the respective companies' partner and customer
bases, opening up new revenue opportunities for the combined
company.
"We operate in adjacent segments of the larger networking market
with a number of common customers for our complementary products,"
said Selina Lo, chief executive of Ruckus.
The companies expect the transaction to close in Brocade's third
fiscal quarter of 2016.
Brocade said it had increased its stock-repurchase program by
$800 million, bringing the total remaining amount authorized under
the program to about $1.7 billion. That move was meant to
facilitate the repurchase of all shares issued in conjunction with
the Ruckus acquisition.
Earlier Monday, Ruckus Wireless raised the lower end of its
profit and revenue forecasts for the first quarter.
The company said it now expects adjusted profit of 9 cents to 10
cents a share on revenue in the range of $98 million to $101
million. In February, the company had issued guidance for
first-quarter profit of 8 cents to 10 cents a share on revenue of
$96 million to $101 million, according to FactSet.
The company also now expects adjusted-operating margin in the
range of 9% to 11%, compared with prior guidance of 8.5% to
11%.
Ruckus, based in Sunnyvale, Calif., is a global supplier of
wireless systems. It focuses on addressing capacity and coverage
challenges caused by high traffic on wireless networks due to the
accelerated adoption of mobile devices.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
April 04, 2016 10:05 ET (14:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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