By Susanna Moon
Chicago, July 21 - Brocade Communications Systems, Inc. signed a definitive agreement to purchase Foundry Networks, Inc. for $3 billion.
Under the agreement, Brocade will pay $18.50 per share in cash plus 0.0907 Brocade shares in exchange for each Foundry common share, or for a total value of $19.25 based on Brocade's closing price of $8.27 on July 18.
The acquisition is expected to close in the fourth quarter of 2008. It has been approved by the board of directors of each company. The deal must be approved by Foundry's stockholders.
Brocade said it expects to finance the acquisition through cash on hand at both companies and about $1.5 billion of committed debt financing from Bank of America and Morgan Stanley Senior Funding, Inc.
"We believe the industry is at an inflection point in the way enterprise and service provider networks and data centers are being architected," Mike Klayko, chief executive officer of Brocade, said in a press release.
"Brocade has taken an important step through this acquisition in developing a networking infrastructure strategy that will serve as the foundation for capitalizing on these dynamic opportunities," Klayko said.
"Brocade and Foundry bring complementary strengths to the table in terms of technology leadership, product portfolio and the ability to capitalize on key market trends," Bobby Johnson, Jr., president and CEO of Foundry, said in the release.
Brocade is a San Jose, Calif.-based networked storage company.
Foundry is a Santa Clara, Calif.-based provider of network switching and routing.
Acquirer: Brocade Communications Systems, Inc.
| Target: | Foundry Networks, Inc.
|
| Announcement date: | July 18
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| Price per share: | $18.50 of cash plus 0.0907 shares
|
| Transaction total: | $3 billion
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| Expected closing: | Fourth quarter of 2008
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| Stock price of acquirer: | Nasdaq: BRCD: $8.33 on July 21
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| Stock price of target: | Nasdaq: FDRY: $13.66 on July 21
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