Brocade to acquire Foundry for $3 billion

Brocade Communications Systems has announced a definitive agreement to acquire Foundry Networks in a deal valued at around $3 billion.

The move will bring to Brocade a set of products that will help them address Ethernet provision for enterprise datacentres, making them a viable alternative to some of the big players globally, including Cisco.

"We believe the industry is at an inflection point in the way enterprise and service provider networks and data centers are being architected. Customers are demanding networking solutions that meet the needs for today and can address the many advances in network convergence that are still ahead," said Mike Klayko, CEO of Brocade in a statement released by the company.

"Brocade has taken an important step through this acquisition in developing a networking infrastructure strategy that will serve as the foundation for capitalising on these dynamic opportunities," he added.

When contacted, Khalid Khalil, regional sales manager CEMA at Brocade said, "We will target to complete the integration of the two companies before the end of the year, maybe to coincide with the start of fiscal year 2009 for Brocade, since it is the most logical thing." "The integration will be complete (like the acquisition of McData before), and Foundry as a name will cease to exist following the assimilation. I am not sure whether that will happen exactly by the start of fiscal year 2009 though. However, we will continue to keep the products and solutions of Foundry as they are, because customers are used to these names."

He added that for now both companies will continue to function as two separate entities and there will be no effect on immediate business. Khalil, who is based in France, said that the regional teams of the companies might not have had a chance to meet yet, but will move forward with things in the next few months to come.

When asked specifically about partners on the ground, Khalil said: "It is too early to say right away. Brocade has succeeded with the integration of McData, which was about the same size as Brocade and had a complex structure. I think it will be easier with Foundry, which has the same go-to-market strategy as Brocade. They are indirect and they go through partners. With all channels in place, we will continue to offer our solutions and even more with the arrival of Brocade in the networking space."

When contacted, Farook Majeed, regional manager for MENA at Foundry Networks stated that it was yet too early to give a picture of how the acquisition will affect regional dynamics of the company, and said that for now it was business as usual.

The deal is subject to approval by shareholders, regulatory requirements and certain other closing conditions, but is expected to close by the end of 2008.