Broadcom to Acquire Brocade Network Equipment Company for $5 Billion

Chip manufacturer Broadcom has reached an agreement with Brocade Communication Systems to acquire that company. Broadcom puts 5.5 billion dollars, converted about 5 billion euros, on the table for the maker of network equipment.

Brocade makes network and storage systems and specializes in switches for fiber-channel storage area networks. Broadcom acquires Brocade for its san products and plans to divest Brocade’s IP Networking business after the acquisition.

The decision to divest the business unit that focuses on IP networks was made by both companies in consultation, they say in a message about the agreement. The deal is worth a total of $5.9 billion. Broadcom will pay 5.5 billion for the acquisition and assume another 0.4 billion in debt.

Chipmaker Broadcom is best known for chips for communication hardware, such as modems and set-top boxes. The company was acquired by Avago in 2015 for $37 billion, but continued to operate under the same name.

Brocade and Broadcom have reached an agreement on the acquisition and are awaiting approval from relevant authorities and shareholders. The companies expect the acquisition to be completed in about six months.