In an effort to expand its network storage capabilities, Broadcom has acquired Brocade Communications for $5.9bn. Media had earlier reported on a possible acquisition of Brocade by chip-maker Broadcom.
Broadcom will pay approximately $5.5 billion in cash, while assuming an extra $400 million of net debt. The company hopes to use the acquisition to strengthen its portfolio of enterprise storage and networking solutions serving OEM customers, it said in a press note.
Broadcom revealed it also plans to divest Brocade’s IP networking business, consisting of wireless and campus networking, data centre switching and routing and software networking solutions. Brocade had acquired Ruckus Wireless for $1.2bn earlier this year. The company had wanted to enhance its capabilities in the wireless side.
“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 stage of growth,” said Hock Tan, president and CEO of Broadcom. Globally, Broadcom competes with Cisco, which makes switches, routers and other telecom equipment.