Brocade completes Foundry acquisition

The deal will bring Foundry's Ethernet LAN business into Brocade's realm of storage-area networks, though Foundry CEO Bobby Johnson will leave the company

Brocade Communications on Friday completed its acquisition of Foundry Networks, a deal that brings a solid Ethernet LAN company into a giant of storage-area networks.

The companies agreed to an approximately $3 billion deal in July, but soon afterward, downturns in the stock and credit markets raised questions about large transactions and the health of IT spending. Brocade got financing for the deal, but Foundry's shares declined, and in late October Brocade lowered its bid to $16.50 per share in cash, or about $2.6 billion. A vote on the transaction by Foundry shareholders was delayed several times, and they finally approved it on Wednesday.

Foundry's products and its approximately 1,100 employees will now be integrated into Brocade. But Bobby Johnson, who founded the company in 1996, won't join Brocade. Johnson "now has the opportunity to pursue several charitable activities that he did not have the time to do while serving in his capacity of CEO," Brocade said in a prepared statement.

Though Brocade won't get that networking veteran, it has hired two others. On Friday, the company said it had hired former Force10 Networks CEO Marc Randall as senior vice president of products and offerings. Randall led the maker of enterprise and service-provider routers and switches from 2003 until this year. He was once vice president of engineering at Cisco Systems, where he led development of the Cisco 7500 Series router, according to Brocade.

Also on Friday, Brocade said it had hired Dave Stevens as CTO. Stevens founded firewall maker Palo Alto Networks and was CEO of the company until he left in June. He is a former Brocade executive who joined the company through its acquisition of Rhapsody Networks in 2003. Stevens' long resume goes back to seminal networking companies such as SynOptics and Bay Networks, as well as Nortel Networks and Atmosphere Networks.

Brocade is a major player in SANs (storage area networks), with more than 55 percent of the market for modular SAN switches in the third quarter of this year, according to Dell'Oro Group. Its nearest competitor, Cisco Systems, trails in that segment with about 44 percent. With Foundry, Brocade goes head-to-head with Cisco across entire enterprise and data-center networks.

The combined company will be able to branch out from a SAN market with approximately $2 billion in annual revenue to the IP network market, which is ten times as big, Brocade CEO Mike Klayko said in a video commentary on the news posted Friday.

Copyright © 2008 IDG Communications, Inc.