Avaya and Brocade Acquisition FAQs

Acquisition of Avaya’s Networking Business

The acquisition of Avaya Networking will provide Extreme Networks (“Extreme”) with a broader set of networking technologies and capabilities that complement our existing product portfolio and enhance our position in the marketplace. The FAQ below will help you understand today’s announcement and what to expect in the coming weeks and months. Today’s announcement supports our growth strategy and builds on our value proposition, as Extreme continues to lead the enterprise campus market with our end-to-end, wired and wireless software-driven network solution technologies. We are excited to share more information at the conclusion of the auction process.

What did Extreme announce today?
Over the past several months, Extreme has been evaluating the technology, go-to-market strategy and customers of Avaya Networking. After close, review of the potential combination and impact on Extreme’s growth strategy, Extreme negotiated and executed an Asset Purchase Agreement (“APA”) with Avaya to acquire its networking business in an auction process as part of Avaya’s reorganization process in bankruptcy court.

What is the strategic rationale of bidding for Avaya Networking?
Extreme delivers differentiated software driven networking solutions to our enterprise campus customers in target verticals. Avaya Networking’s technology, heritage and enterprise campus focus complements Extreme’s strategy.

What exactly is Extreme Networks acquiring?
Extreme has filed its intention to acquire all of the assets of Avaya’s networking business.

How much revenue is this expected to add once closed?
Avaya Networking has not yet delivered standalone-audited financials for the business but is expected to yield annual revenues in excess of $200 million. Extreme believes there are potential financial synergies and complementary products between the two businesses across Extreme’s vertical markets so that the transaction will be accretive to the Company’s earnings and cash flow beginning in fiscal 2018. The Company will update its quarterly guidance, including total revenue, once the deal is consummated.

How would customers and partners benefit from a combined Extreme Networks and Avaya Networking?

Avaya customers and partners:
Avaya customers and partners will be supported by Extreme’s award winning customer service and have access to Extreme’s integrated solutions portfolio for the campus enterprise. Extreme’s single pane of glass network management, analytics, and control platforms plan to be expanded to support Avaya’s switching portfolio and will deliver unified visibility and control from the data center through the core, access layer and access point to the end user device.

Extreme customers and partners:
Extreme customers and partners will have access to Avaya’s pioneering and award-winning switching fabric technology for highly secure, simplified access, management and control of their data center, core and edge switching environments.

Extreme Acquires Brocade’s Data Center Networking Business FAQs

The acquisition of Brocade’s data center switching, routing, and analytics business from Broadcom greatly enhances Extreme’s data center technology portfolio, strengthens its go-to-market strategy across target verticals and allows the company to compete effectively in the large enterprise data center. This news, combined with Extreme’s organic investments in R&D and the recent announcements regarding Avaya’s networking business and successful integration of Zebra’s wireless LAN business reinforces Extreme’s corporate strategy of becoming the world’s first end-to-end pure-play enterprise networking company with a focus on customer service and support. We are excited to share more information when the deal closes.

What did Extreme Networks announce today?

A: Extreme announced an agreement with Broadcom to acquire Brocade’s data center networking  business for $55 million in cash, consisting of $35 million at closing and $20 million in deferred payments paid quarterly over five years, as well as additional potential performance-based payments to Broadcom, to be paid over a five-year term.

What is the strategic rationale of acquiring Brocade’s data center networking business?

A: The acquisition of Brocade’s data center networking business greatly enhances Extreme’s data center technology portfolio, strengthens our go-to-market in our target verticals of education, hospitality, healthcare, retail, transportation and logistics, manufacturing and government and reinforces Extreme’s strategy of being the only pure-play networking company focused on delivering end-to-end, data center to edge, software-driven solutions. Combined with the Avaya Networking business, assuming Extreme wins this business in Avaya’s bankruptcy process, Extreme is expected to generate over $1 billion in annual revenues.

What exactly is Extreme Networks acquiring?

A: Extreme will acquire all of the assets of Brocade’s recently refreshed high-end data center networking business including data center switching (VDX) and routing (MLX), as well as a new converged switching/routing product line (SLX), in addition to world-class automation and network application visibility software. Brocade’s portfolio enables Extreme to compete in larger enterprise data center opportunities and opens new sales opportunities for the campus/edge network from Brocade’s existing large enterprise data center customers.

How much revenue is this expected to add once closed?

A: Extreme expects annual revenue contribution to be in excess of $230 million.

How would customers and partners benefit from a combined Extreme Networks and Brocade?

Brocade customers and partners:

A: Brocade’s customers and partners will benefit from Extreme being part of a “pure play” networking company with the industry’s only insourced customer service and technical support organization.  Extreme will bring its complementary portfolio of core and edge fixed switches, its WLAN portfolio and its high-quality software portfolio of management, control, and analytics platforms that provide visibility and control across the entire enterprise network.

Extreme customers and partners:

A: Extreme’s customers and partners will benefit from the strength of the Brocade data center switching and routing portfolio including its fabric technology and automation software enabling network configuration simplicity. For the more sophisticated data center use cases, the DevOps style data center automation platform from Brocade will provide Extreme customers with flexible network orchestration capabilities. The Brocade acquisition further strengthens Extreme’s software expertise and innovation, enabling customers to have better visibility and control of their network assets from the wireless edge to the campus core and the data center all under one management paradigm.

Does this deal affect the bidding process of Avaya Networking?

A: No. The bidding process for Avaya Networking remains unchanged. 

When is the deal expected to close?

A: This deal is expected to close within 60 days of Broadcom closing its Brocade acquisition which is expected to be by the end of July 2017 and is subject to customary closing conditions, including certain regulatory approvals.

How does Brocade fit in Extreme Networks’ business model?

A: Brocade designs, develops and manufactures hardware and software networking solutions for enterprise customers, which is the same as Extreme and Avaya. The solutions are sold along with support and services to enterprise customers, with a focus on data center solutions. The business model is contiguous with that of Extreme and Avaya. 

In which vertical markets does Brocade sell to?

A: Brocade sells into the same verticals as Extreme including the federal government, healthcare, and education.  

How much will Brocade potentially add to Extreme’s total addressable market?

A: Brocade increases Extreme’s total addressable market size to $12.9 billion, up from $9.4 billion.