decor decor
"The phoenix must burn to emerge."

-Janet Fitch

Broadcom to Buy Brocade Communications

Financial Information
  • Enterprise Value                            $5.6 billion
  • EV/LTM Revenue                          2.4x
  • EV/LTM EBITDA                           11.3x
Transaction Facts
  • Broadcom Limited (Nasdaq: AVGO) announced today that it agreed to acquire Brocade Communications Systems (Nasdaq:BRCD).
  • Brocade investors will receive 12.75 per share in cash in the transaction, representing a 47 percent premium over Brocade’s closing price Friday.
  • Broadcom shares closed today up 2.23 percent, though they declined 1.5 percent after hours.
  • The transaction is scheduled to close sometime in the second half of Broadcom’s fiscal year, which began October 31.
Consolidation Continues in Semiconductor Space 
  • One Year Later, Making Big WavesBroadcom Limited, originally Avago before taking Broadcom’s name as part of a $37 billion acquisition, continues to dramatically grow and improve the business – this time by expanding into storage area networking space.
  • Billions and Billions Sold: The semiconductor industry has seen significant consolidation in recent months, with over $100 billion in deals in the last 24 months. Acquisitions have included Qualcomm’s agreement to purchase NXP Semiconductors for $45 billion, Intel’s $17 billion purchase of Altera and Softbank’s $32 billion acquisition of ARM Holdings.
  • Targeted Growth: Broadcom also announced that it plans to divest Brocade’s IP Networking business, acquired in its $1.5 billion purchase of Ruckless Wireless in April and including wireless networking, switching and routing and software networking solutions – some of which compete with Broadcom’s largest customers such as Cisco and HP Enterprise. However, the broader acquisition is not conditional on this divestiture.
  • Branching out and Lifting Pressure: Broadcom is a heavy supplier of wireless chips to smartphone manufacturers, and like Qualcomm is facing increased pressure thanks to market maturation. This deal helps diversify its customer set, preserving margins in a competitive industry.
For more information about this transaction, click here to read the press release.
martinwolf was not the advisor in this transaction.
previous post Back to Articles next post

09 May 2023

DynamicsCon LIVE Conference Information

martinwolf will be attending the DynamicsCon LIVE conference in Scottsdale May 22-25. Book a confidential one-on-one meeting with Michael Rosholt to learn about market trends, current valuations, and how to prepare for a sale.    DynamicsCon attendees are also eligible for a complementary M&A Readiness Scorecard from martinwolf.   Contact Michael Rosholt at mrosholt@martinwolf.com to...

22 Feb 2023

How Microsoft Channel Partners Can Command High Valuations

In today’s rapidly changing ecosystem, simple organic growth doesn’t give Microsoft Channel Partners long-term competitive advantage.   During the last five years, Microsoft Channel Partners have commanded high valuations due to strong and sustainable business models, as well as a track record of profitability. Most were small mid-market businesses that had to decide to be...

31 Jan 2023

Rising Interest Rates Chill Private Equity Pace

After a year of strength on the private equity front, 2022 is now in the rearview mirror and industry professionals anticipate a downgrade in performance for the coming year.   Despite the fluctuations of the past few years, private equity has withstood the challenges relatively well. However, in certain areas such as exit activity and...