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Broadcom eyes Brocade acquisition

Broadcom eyes Brocade acquisition

A new deal could be announced within days

Lloyd Carney (R) - CEO, Brocade

Lloyd Carney (R) - CEO, Brocade

Wi-Fi chip manufacturer, Broadcom, is reportedly in advanced negotiations to acquire network player, Brocade Communications System, with media outlets suggesting the companies could strike a deal as early as this week.

Sources familiar with the matter indicate that, although a deal could be announced within days, the talks could still fall apart, according to a report by Reuters.

It emerged, on October 31, that Brocade was in negotiations to sell, with Bloomberg naming Broadcom as one of the interested potential buyers. Reports indicate that if the deal goes ahead, Broadcom would keep Brocade’s storage and fibre channel business, while potentially divesting the company’s networking business.

The reports of acquisition discussions come less than a year after Broadcom itself was acquired for $US37 billion by Avago Technologies, with that deal closing in February. The combined entity subsequently took on the Broadcom name, and now stands as one of the biggest chip manufacturers in the world.

Broadcom itself was considered to be the largest maker of Wi-Fi chips for short-range connections in mobile devices prior to its acquisition by Avago which, at the time, stood as the largest takeover in the tech industry. However, this was eclipsed when Dell completed its $US74 billion acquisition of EMC in September.

If Broadcom does indeed acquire Brocade, and ultimately decides to divest the company’s networking business, it could effectively see the company say goodbye to much of the networking capability Brocade sought to take on with its $US1.2 billion acquisition of Ruckus Wireless in May.

"Our combined world-class portfolio now provides customers with greater flexibility in meeting today's infrastructure requirements, including high performance, flexible, secure access networks,” Brocade CEO, Lloyd Carney, said at the time.

“We are thrilled to welcome the Ruckus team to Brocade and look forward to working together to help our customers transform their networks into an open platform for business innovation," he said.

Locally, Brocade’s acquisition of Ruckus Wireless led to a leadership vacuum in A/NZ, with Gary Denman stepping down as Brocade A/NZ managing director in June, and Ruckus managing director for A/NZ and the Pacific Islands, Pat Devlin, parting ways with the company.

The microprocessor market has seen much high-profile consolidation recently, with mobile device chipset maker, Qualcomm, agreeing late last month to buy NXP Semiconductors for more than $US37 billion.

The combination of Qualcomm and NXP will have annual revenue of around $35 billion, Qualcomm said at the time.

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