In a deal that pumps up its wireless technology portfolio, Arris is buying Brocade’s Ruckus Wireless unit and its ICX Switch business for $800 million in cash.
The deal, predicted by Reuters, will include both wireless and wired broadband products targeted at the enterprise and service provider sector.
The proposed deal is contingent on Broadcom closing its pending acquisition of Brocade. Under terms of the agreement, Arris is buying those assets for $800 million cash, plus the additional cost of unvested employee stock awards that would follow the closing of the Broadcom-Brocade merger.
Arris, which sees the deal expanding its reach beyond the home and into the education, public venue, hospitality, enterprise and MDU arenas, said it plans to introduce Ruckus as a dedicated business unit within Arris, led by current Ruckus COO Rabinovitsj.
About 1,600 employees will be joining Arris as a result of the deal.
Ruckus and Arris know each other well, as Arris has been hawking Ruckus products since the companies struck a reselling deal in 2011.
The acquisition is another sizable one for Arris, which acquired U.K.-based set-top maker Pace plc more than a year ago for $2.1 billion, and bought Motorola Home in April 2013 for $2.35 billion. It’s also the first big M&A for Arris under new CEO Bruce McClelland, who succeeded Bob Stanzione in that role last fall.
As we work together to enable the next era of connected experiences, we are beginning to see the lines blur; not just between wireless technologies, but between wired and wireless networking," McClelland proclaimed in this blog post about the proposed deal. “Five years from now, every service provider will also be a wireless operator."
LionTree Advisors is acting as lead financial advisor, and Troutman Sanders LLP is acting as counsel to Arris on the deal. Barclays is acting as lead financial advisor, and Latham & Watkins LLP is acting as counsel to Broadcom on this transaction.
The deal was announced in concert with Arris’s Q4 results. The company posted GAAP revenues of $1.75 billion, up 60% from the year-ago quarter, and up 2% from Q3 2016, along with GAAP net income of 45 cents per diluted share.
For Q1, Arris is expecting revenues of $1.43 billion to $1.48 billion and a GAAP net loss of 13 cents to 9 cents per share. That forecast does not include Arris's pending acquisition of Ruckus and Brocade’s ICX Switch business.