Brocade to buy Foundry Networks

Brocade has announced plans to acquire Foundry Networks, in a deal valued at approximately $3bn (£1.5bn).

Under the agreement, Brocade will pay a combination of $18.50 of cash plus 0.0907 shares of Brocade common stock in exchange for each share of Foundry common stock, for a total value of $19.25 per share, the two companies said in a joint press release issued on Monday.

California-based Foundry is a 12-year-old company that deals with enterprise and service provider switching and routing. Brocade's chief executive praised Foundry as "strong and well respected" in the industry during a conference call with investors and media on Monday.

It appears that Brocade could be turning a corner in a year that has so far been a public-relations nightmare for the company. In January, the company's former chief executive was handed a long jail sentence for criminal misconduct. Last month, the company also found out that it would be paying $160m for Brocade Communications to settle a US federal securities class-action lawsuit tied to the company's stock-option backdating practices.

On the conference call, Brocade chief executive Mike Klayko said that the two companies share a vision for the future of next-generation datacentres and networks, and there are plenty of synergies between them that Brocade will take advantage of.

Brocade and Foundry's boards of directors have both approved the deal, but the acquisition is still pending the votes of Foundry's shareholders.

The companies expect the deal to be finalised in the fourth quarter of this year.

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