Analysts: Synergies Are Good for Brocade-McData Union
Brocade becomes a $2 billion company with the move and fortifies its product line to compete with renewed vigor in the storage networking space.Analysts say that the synergies between data storage equipment maker Brocade Communications Systems and rival McDatawhich Brocade said Aug. 8 it will acquire for $713 million in stockare good and that the proposed merger should eventually bode well for both companies. Brocade executives told investors and analysts in a hastily arranged early-morning conference call that it will acquire rival McData for $4.61 per share. The purchase price equaled a 48 percent premium above Mondays $3.11 closing price on McDatas Class A shares.
If the deal is completed, Brocade, based in San Jose, Calif., will have increased its net worth from $1.55 billion to just under $2 billion, according to Standard & Poors CapitalIQ.