Brocade completes McDATA acquisition

Brocade has announced that it has completed the acquisition of McDATA Corporation The transaction closed on Monday, January 29, 2007.  As a result of the acquisition, shares of McDATA class A and B common stock were converted into the right to receive .75 shares of Brocade common stock and are no longer being traded. Based on Brocade’s closing stock price on January 26, 2007, the transaction is valued at approximately $1.3 billion.  In conjunction with the closing of the acquisition, Brocade detailed an integrated product line and roadmap, launched a new company branding initiative and announced an additional $200 million stock repurchase authorisation.

The combination of Brocade and McDATA creates the world’s leading storage networking company with significant benefits for customers, partners, and shareholders.  The Company plans to deliver new levels of interoperability and SAN management to protect and extend customers’ investments as they evolve and grow their data centers.  The acquisition also brings Brocade important new skills and resources that will allow it to further broaden its range of solutions and services to its customers and OEM partners.

“Absolute customer satisfaction is our priority,” said Mike Klayko, Brocade’s Chief Executive Officer.  “After five months of focused integration planning, today we are ready to begin rolling out the advantages of this combined company to the marketplace.  We believe that our strengthened ability to rapidly deliver innovative technologies, combined with our industry-leading service and support capabilities, will be crucial to customers as they grow and evolve their data centers.  It is an exciting day for Brocade.”

“With the completion of the acquisition, customers should now have increased confidence and direction from Brocade for their strategic storage networking investments,” said Steve Duplessie, founder of the Enterprise Strategy Group.  “Brocade’s commitment to protect and extend current customer investments with interoperability and new innovations should bode well for them. In addition, OEM partners will begin to enjoy a more streamlined operational and qualification process from the combined entity.”

“I am very pleased with the integration and planning work we have already completed which will allow us to fully integrate the combined companies quickly”, said Richard Deranleau, Brocade’s Chief Financial Officer.  “As a result, I remain very comfortable with the annualised synergies of $100 million by the fourth quarter of combined operations as previously disclosed.”

As a result of operational synergies, the transaction is expected to be accretive to Brocade on a non-GAAP earnings per share basis by Q1 08 and the Company expects to operate within its long term financial model for the first full year of combined operations.

“HP looks forward to pursuing new markets with Brocade and offering our joint customers the highest levels of support, services and exciting new technologies for the next-generation data center.” said Duncan Campbell, Vice President of Marketing, Storage Works Division, HP.

“Both Brocade and McDATA have a rich history of innovation in storage networking, and have played a vital role in introducing features and functions that have greatly benefited customers,” said Andy Monshaw, General Manager, IBM System Storage.  “IBM values its relationship with Brocade, and we are excited about the potential for further advancements in networked storage technologies, and the company continuing to create new categories to address customers’ pressing needs.”