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Extreme Networks to Become Major Networking Player with Brocade, Avaya Acquisitions

Data center

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in January.**

Extreme Networks’ purchase of Brocade’s data-center networking unit, along with its planned purchase of Avaya’s networking business, could make it the third-largest wired and wireless enterprise networking equipment vendor behind Cisco and HPE.

451 Research's Jim DuffyThat’s according to Jim Duffy, senior analyst of networking at 451 Research. On Wednesday, Extreme announced the $55 million Brocade deal. This comes a year after Brocade purchased Ruckus Wireless and months after Broadcom announced it would buy Brocade for about $6 billion.

Avaya has entered into an asset purchase agreement with Extreme, under which Extreme will serve as the primary bidder in a section 363 sale under the U.S. Bankruptcy Code. Avaya filed for chapter 11 bankruptcy protection to reduce its debt load of about $6.3 billion.

“The Brocade unit is expected to add $230 million to Extreme’s top line in its next fiscal year,” Duffy said. “Customer overlap was minimal, as Brocade’s data center business was targeting the large enterprise core data centers with more than 2,000 physical servers, while Extreme was concentrating on the campus edge (WLAN and access switching, and fewer than 2,000 servers). The two have joint customers, for example, that use Brocade in the data center and Extreme at the WLAN edge. Nonetheless, Extreme says it’ll gain 6,000 customers using Brocade’s VDX, MLX and new SLX routers and switches.”

Extreme Networks said it will take over the data-center networking business two months after the still-pending Broadcom-Brocade acquisition closes. This could potentially lead to Extreme’s deal finalizing at the end of 2017.{ad}

“In addition to the $55 million it’ll get from Extreme, Broadcom (Brocade’s acquirer) could additionally benefit,” Duffy said. “Broadcom is already Extreme’s largest supplier, and Extreme says it will increase its current $100 million annual spend with Broadcom.”

Industry analyst and Channel Partners contributor Michael Finneran, said the market has been “hot on Extreme with its stock trading at over twice its level of a year ago and up 18.8 percent in the last four weeks.”

“While the Brocade acquisition will help fill out their data center offerings, it still has a long way to go to catch Juniper Networks that has roughly 10 times the revenue or Cisco that has 100 times,” he said.


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