Brocade Reportedly in Advanced Acquisition Negotiations

Networking technology provider Brocade Communications could be the next tech vendor to be sold in what’s becoming a busy season in the industry for acquisitions.

Citing unnamed sources, Bloomberg reported that officials with Brocade—which offers everything from wired and wireless networking products to software-defined network (SDN) and network analytics technologies—are in advanced talks to sell the company and that chip maker Broadcom is a potential buyer. A deal could be announced as early as this week, the sources said.

Brocade officials have not commented on reports of a possible deal.

An acquisition would come at a time of rapid change in the networking space driven by the rise of the cloud and network virtualization technologies like SDN and network-functions virtualization (NFV) and the growing shift by customers away from vendor-specific proprietary offerings to more open network infrastructures.

Brocade over the past several years has worked to broaden its product portfolio, including an aggressive push into the SDN space launched when the company bought Vyatta in 2012 and the expansion of such products as its Fibre Channel technology and its Analytics Monitoring Platform. In addition, the company extended its reach in the wireless networking space earlier this year when it bought Ruckus Wireless for $1.2 billion.

In announcing the Ruckus deal in April, Chief Marketing Officer Christine Heckart told eWEEK that buying the wireless technology vendor, with its various wireless voice, video and data products, was a “good step in the direction of completing our vision [to become a one-stop networking shop].”

The deal followed similar moves by other vendors like Hewlett Packard Enterprise (HPE), which last year bought Aruba Networks for $3 billion to build out its wireless networking capabilities. At the same time, it highlighted the high level of competition Brocade faces, not only from HPE but also Cisco Systems, Juniper Networks and other top-tier networking vendors.

In September, Brocade officials reported that third-quarter revenue came in at $591 million, a 7 percent increase over the same period in 2015.

For Broadcom, bringing a networking vendor into the fold would broaden its presence in a space that is gaining more attention as businesses adopt hybrid cloud environments. The company already sells chips into the networking and storage markets, particularly the popular StrataXGS Trident and Tomahawk systems-on-a-chip (SoCs) for network switches.

Broadcom already has been at the center of a major acquisition. Avago Technologies last year bought Broadcom for $37 billion and then adopted the Broadcom name. Earlier this year, Broadcom sold its internet of things (IoT) business to Cypress Semiconductor for $550 million.

A deal involving Brocade would be the latest in a number of major acquisitions in the industry in recent months. Qualcomm officials last week said the company is buying rival chip maker NXP for $47 billion, and telecommunications company CenturyLink this week said it is spending $34 billion to buy service provider Level 3 Communications. Both announcements came just over a month after Dell completed its massive $60 billion-plus acquisition of data storage giant EMC.