Aruba to Buy Outdoor Wireless Vendor for $27M

Aruba Networks Inc. (ARUN) announced Monday the execution of a definitive agreement to purchase Azalea Networks, a supplier of outdoor mesh networks, a move that will enable the Wi-Fi gearmaker to delivery mobility solutions that span from indoor carpeted spaces to the outdoor industrial enterprise.

Under the terms of the agreement, Aruba will acquire Azalea in exchange for total consideration of approximately $27 million in stock subject to certain adjustments and up to $13.5 million in cash over two years. The acquisition is expected to close in the first quarter of Aruba’s 2011 fiscal year, subject to standard closing conditions, and to be neutral or accretive to results over the next 12 months. Azalea had 2009 revenues of approximately $5 million, and a total customer base of over 140 companies.

The acquisition includes an operations center in Beijing, which will complement Aruba’s existing R&D centers in Bangalore and Silicon Valley.

Azelea provides mesh products for outdoor industrial applications in the oil and gas, logistics, manufacturing, mining, petrochemical, public safety, smart grid, and transportation sectors. Aruba makes Wi-Fi controllers and access points for enterprise and branch office networks.

“Enterprises have primarily focused WLAN deployments on indoor spaces, but outdoor applications loom large,” said Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics Research. “The economic recovery, the need for ubiquitous connectivity, and emerging applications like smart grid and video surveillance are going to accelerate outdoor wireless infrastructure deployments by enterprises in the coming years. Azalea’s mesh technology will enable Aruba to provide an integrated, enterprise-wide wireless infrastructure that addresses both indoor and outdoor applications.”

In a mesh network, data packets hop wirelessly from radio to radio. Azalea’s mesh technology allows it to also carry latency-sensitive video and voice traffic, with full fidelity, over long distances. The value of this capability has been field-proven in demanding applications like the 2008 Beijing Olympic Games, in which 600 mesh nodes provided voice, video and Wi-Fi access to more than 19 square miles (50 square kilometers) of the city. To date, Azalea has shipped more than 25,000 mesh nodes worldwide.

“This acquisition brings our customers and prospects innovative new solutions for real-time outdoor applications like video surveillance,” said Hitesh Sheth, Aruba’s COO.

“Enterprises need a secure, reliable link between their assets and the people who use them, wherever they work or roam. Outdoor networks need to cope with a wide range of environmental factors, and this challenge is compounded when video and voice need to be sent over long distances in real-time. Azalea has made outdoor mesh work in industrial enterprise applications that cut across a wide range of verticals.”

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