Feeds

Brocade chomps McData

Swallows $713m McNugget whole

Designing a Defense for Mobile Applications

Brocade will acquire fellow storage switch maker McData in a $713m all-stock deal.

Under the terms, McData shareholders will control 30 per cent of the new combined company. Based on Brocade's $6.14 closing price yesterday, McData's shareholders will get 0.75 Brocade shares for each McData share they own, valuing McData's stock at around $4.61 a piece. McData's market value Monday was $3.11 for class A stock and $2.85 for class B.

Both boards gave unanimous approval to the deal, which is expected to be completed by Q1 2007. The firms will continue as separate entities until then.

Brocade CEO Michael Klayko said: "The acquisition of McData will build on Brocade's vision for the next generation data centre, leveraging Brocade's product innovation and operational discipline.

"The combined company will accelerate innovation and the delivery of a diverse set of compelling and cost-effective solutions to customers, while preserving investment protection, simplifying administration and management, and delivering greater interoperability."

Brocade, McData and Cisco dominate the Fibre Channel storage switch market. This deal would clearly strengthen McCade's position against the much larger Cisco, which only entered the market in 2002 after acquiring Andiamo. Cisco has long set a goal of becoming the number one or two Fibre Channel switch player and the creation of Brodata assures it of hitting that target.

Brocade anticipates $100m annual cost savings through the merger. Brocade's top brass will stay, with McData CEO John Kelley taking an advisory role and two McData directors joining the combined board. Brocade will maintain its name, with McData becoming a wholly-owned subsidary on closing the deal.

In separate releases, the two firms delivered preliminary results. Brocade expects net revenues around $189m for its fiscal Q3, up 54 per cent on the same period last year, and delivering earnings per share of $0.08 to $0.09. The final results are due 17 August. Read the press release here.

McData, meanwhile, expects net revenues of between $150m and $152m, below previous guidance of $170m to $180m. Earnings per share will be break-even at best, and potentially a loss of $0.02. The firm blames weak demand ahead of forthcoming product launches. McData's figures are here. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Apple fanbois SCREAM as update BRICKS their Macbook Airs
Ragegasm spills over as firmware upgrade kills machines
Attack of the clones: Oracle's latest Red Hat Linux lookalike arrives
Oracle's Linux boss says Larry's Linux isn't just for Oracle apps anymore
THUD! WD plonks down SIX TERABYTE 'consumer NAS' fatboy
Now that's a LOT of porn or pirated movies. Or, you know, other consumer stuff
EU's top data cops to meet Google, Microsoft et al over 'right to be forgotten'
Plan to hammer out 'coherent' guidelines. Good luck chaps!
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
FLAPE – the next BIG THING in storage
Find cold data with flash, transmit it from tape
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.