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Broadcom to acquire Brocade for $5.9 billion

Infrastructure

Designer, developer, and global supplier of semiconductor connectivity solutions, Broadcom Ltd, has acquired Brocade Communication Systems, Inc., a leader in fibre channel storage area network switching and IP networking, in an all-cash transaction of $5.9 billion.

Broadcom, a provider of connectivity components such as Wi-Fi chips to companies like Apple, HTC, and LG, continues to invest in the Internet of Things (IoT) with this latest acquisition that comes a year after a $37 billion merger with fellow chip maker, Avago. Earlier this year, Brocade had acquired Ruckus Wireless for $1.2 billion.

This move comes in an effort to maintain Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers. Brocade’s storage area network business will be tied into Broadcom’s offerings to bolster its enterprise storage portfolio.

“Our storage area network business will offer a strong complement to Broadcom’s offerings and capabilities , creating one of the industry’s broadest portfolios for enterprise storage,” said Lloyd Carney, Brocade CEO in a blog post. “We believe that we will be able to further strengthen our OEM and partner ecosystem and help customers meet the next-generation network and storage requirement of digital business.”

Due to overlap between its important customers, Broadcom will look for a buyer for Brocade’s IP networking business. The IP networking business consists of wireless and campus networking, data centre switching and routing, and software networking solutions.

Until that happens, Broadcom and Brocade will work to make sure that the IP networking business can continue to grow and function at full capacity.