Shareholders of Foundry Networks Inc. approved the company’s merger with Brocade at a special meeting held Dec. 17. The US$2.6 billion union is one of the network industry’s biggest this year.
San Jose, Calif.-based Brocade, which makes host bus adapters, switches, storage-area networking and other data centre products, said it believes it will not require any supplemental financing to close the transaction. The company said net proceeds from a $1.1 billion term loan facility combined with the cash on hand at the two companies, along with a small draw under its revolver credit line, are sufficient to finance the transaction.
Brocade expects to close the acquisition on Dec. 18, subject to the satisfaction of customary terms and conditions. At the closing, each outstanding share of Foundry common stock will be exchanged for $16.50 in cash.
The deal, initially announced last July, was Brocade’s foray into the networking arena, allowing it to offer products for wide-area, local-area networking, plus the data centre. Santa Clara, Calif.-based Foundry’s product line includes ServerIron switches. Last summer, officials said the combined company will be led by Brocade CEO Michael Klayko and will use only the Brocade brand, although product names from Foundry will remain.
Last summer, the companies said Bobby Johnson, Foundry’s founder, president and CEO, would remain with the company, but they did not say what his job would be.
Two years ago, Brocade acquired McData.
Foundry has completed the sale of its portfolio of auction rate securities. Based on estimated net proceeds of $38.8 million from the sale, Foundry expects to pay stockholders a cash dividend of $0.249 per share immediately prior to the completion of the merger.
The final dividend amount will be based on Foundry’s fully diluted share count as of the time of the completion of the merger.