Broadcom Ltd (NASDAQ:AVGO) and Extreme Networks, Inc (NASDAQ:EXTR) on Wednesday joined hands on a common course. From the dealing, Extreme was to acquire Brocade Communication Systems’ data center routine, switching and analytics business from Broadcom.
According to sources, Brocade’s data center networking business will be purchased by extreme for $55 million in cash.$20 Million will be released as deferred payments not forgetting the $35 million at closing and the potential for the performance-based payments to the company which must be paid within a timeframe of five years.
At this point in time, Brocade, which happens to be a semi-conductor provider, has been subjected to an extended antitrust investigation by the Federal Trade Commission. Broadcom made public FTC’s second request for information in regards to the deal in a securities filing which was conducted in the early days of this year.
From a statement from the company, it was made clear beyond any cloud of doubt that Broadcom still hoped for a merger which would definitely close in the second half of fiscal 2017 most probably by Oct. 28.That divestiture on Wednesday made it public that it would not for any reason be compelled to iron out the antitrust concerns the FTC might bring forward.
Truth be told, Broadcom is as a matter of fact definitely shedding a unit which goes a long way to compete with a large number of Broadcom’s OEM customers such as Arista, Juniper and Cisco. There is an ongoing debate seeking to look into whether divestitures will be needed in Broadcom receiving the sought after approval of the deal.
The recent deal happens to be one among the numerous plans the company has been laying down in an effort to try and become a market leader. The current times have pulled in with a lot of changes, technological advancements being one of them which are sparking about great business dynamics.
The outstanding aspect lies in the idea that the company has been able to over the years make tremendous steps forward which has caused it to become one of the success stories. Much more is on the way, but we just have to wait and see!
