We have seen semiconductor companies trying to be very vertical-focused by selling off some of their businesses but here we have news where semiconductor chip vendor Broadcom has entered into product/box area. Broadcom has acquired an enterprise storage company called Brocade Communications Systems Inc. for around $5.9 Billion. Brocade Communications Systems is into Fibre Channel storage area network (“FC SAN”) switching and IP networking. Through this acquisition, Broadcom enters enterprise storage business but can Broadcom still keep the IP networking part of the Brocade? That’s been questioned by many other reported stories.
Some media reports suggestsBroadcom may sell off the IP networking part of the Brocade to some other vendors afer the completion of acquisition to stay away itself from competing with its own customers.
“This strategic acquisition enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers,” stated Hock Tan, President and Chief Executive Officer of Broadcom. “With deep expertise in mission-critical storage networking, Brocade increases our ability to address the evolving needs of our OEM customers. In addition, we are confident that we will find a great home for Brocade’s valuable IP networking business that will best position that business for its next phase of growth.”
“This transaction represents significant value for our shareholders, who will receive a 47% premium from the Brocade closing share price on Friday, October 28, 2016, and creates new opportunities for our customers and partners,” said Lloyd Carney, Chief Executive Officer of Brocade. “Our best-in-class FC SAN solutions will help Broadcom create one of the industry’s broadest portfolios for enterprise storage. We will work with Broadcom as it seeks to find a buyer for our IP Networking business which includes a full portfolio of open, hardware and software-based solutions spanning the core of the data center to the network edge.”