A year to the date of the original merger announcement Broadcom to buy Brocade for $5.9bn, both Brocade and Broadcom AVGO 250,03 +6,50 +2,67% have announced a delay in their merger. The Committee on Foreign Investment in the United States (CFIUS) needs more time for investigation. So to support this, they have withdrawn and refiled their documents with CFIUS. CFIUS, in turn, are using a shorter 45-day review period instead of the customary 75-day detailed review.
Broadcom and Brocade initially had a clause in to terminate the merger agreement if it past November 1, 2017. Even with the shorter review period, they will miss this target. Both organisations have agreed to refrain from exercising the clause, expecting the merger to complete by November 30, 2017.
From Brocade’s press-release (Brocade provides update on proposed Broadcom acquisition):
“We are actively engaged with CFIUS and remain committed to Broadcom’s proposed acquisition of Brocade. We continue to work diligently and cooperatively with Broadcom to close the transaction as soon as possible in a challenging and dynamic policy and regulatory environment. In the meantime, we are pleased to announce an agreement to divest our data center networking business to Extreme Networks, which we believe is in the best interest of our shareholders, customers, partners and the employees aligned with the business.” – Lloyd Carney, CEO, Brocade.
“We are fully committed to the acquisition of Brocade and are working closely with CFIUS and Brocade to complete this transaction.” – Tom Krause, CFO, Broadcom.