Brocade’s New Networking Foundry

The networking world is now a little smaller thanks to Brocade buying out networking
company Foundry for $3 billion. The deal creates a new end-to-end networking vendor from
storage area networks (SAN) to networking switches that will compete with industry giants
Cisco (NASDAQ: CSCO) and Juniper (NASDAQ: JNPR).

The deal has already been approved by the board of directors of both Brocade and
Foundry. Brocade noted in a release that it expects the deal to close pending regulatory
approval in the fourth quarter of 2008.

Brocade will give 0.0907 shares of its stock for each Foundry common stock share as
well as an $18.50 cash payment per share, bringing the total payment to $19.25 for each
Foundry share.

It is not yet clear how many staff positions will be eliminated as a result of the
buyout or what role the former CEO of Foundry will take in the new firm. Foundry CEO
Bobby Johnson Jr. said on a conference call with analysts that the deal was completed on
Tuesday and that no decisions had yet been made about head count reductions or his role
with the new company, which will be known simply as Brocade.

Brocade CEO Michael Klayko will continue as CEO of the new combined entity. “For
people that don’t know the history here Brocade and Foundry are more or less siblings,”
Foundry CEO Bobby Johnson Jr. said on the conference call.

Johnson noted that both Foundry and Brocade received their initial seed money from the
same investors and that the two were like sister companies.

The Foundry name will fade out over time, though product names from Foundry will
continue under the new Brocade brand.

“The company is called Brocade, but product lines will live on,” Klayko said on the
call. “Customers will be familiar with what they are buying, it will be one company and
one brand.”

Brocade’s last major acquisition was storage vendor McData, which closed in
for $713 million.

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