On Monday, Brocade Communications Systems, Inc. (NASDAQ: BRCD) agreed to buy Ruckus Wireless Inc. (NYSE: RKUS) for approximately $1.2 billion, expanding Brocade’s wireless-products footprint in the service-provider industry. Shares of Brocade Communications Systems was down 15.46% to $8.99 while Ruckus Wireless jumped up 29.80% to $12.98 on Monday morning.
According to the agreement, Ruckus Wireless stockholders will receive 0.75 shares and $6.45 in cash from Brocade for each share of Ruckus. Based on the closing price of Friday, the transaction values Ruckus at a 44% premium price of $14.43 per share, or about $1.5 billion when taking the estimated cash acquired into account. But Brocade said the transaction price may fluctuate until close deal.
"This strategic combination will position us to expand our addressable market and technology leadership with Ruckus' fast-growing wireless LAN products, and supports our vision to deliver market-leading New IP solutions that enable the network to become a platform for innovation," said Lloyd Carney, chief executive officer of Brocade.
"The combination of our two companies will create an exciting new thought leader in networking and significant opportunities for our stakeholders to participate in the combined company's future growth potential," said Selina Lo, president and CEO of Ruckus.
This takeover will be conducted by means of an exchange offer for all of the outstanding shares of Ruckus Wireless. The completion of the exchange offer is subject to traditional conditions, including reviews by U.S. and international antitrust regulators and the tender of a majority of the outstanding shares of Ruckus Wireless' common stock. The companies expect the transaction to close in Brocade's third fiscal quarter of 2016.