By Craig Barner
US network equipment specialist Arris International (NASDAQ:ARRS) has said it is still on track to complete its US$800m acquisition of Brocade Communications Systems’ (NASDAQ:BRCD) Ruckus Wireless and ICX Switch business this quarter, despite a further regulatory delay.
The deal has hinged on the closing of US chipmaker Broadcom’s (FRA:BRX) acquisition of Brocade, but yesterday the companies announced a further complication. The two said that they have refiled their notice with the Committee on Foreign Investment in the United States. They want to provide the agency, which reviews certain foreign transactions, more time so it can consider their proposed deal.
They also said that CFIUS has agreed to proceed directly to a 45-day investigation period, which will commence tomorrow (4 October) and conclude no later than 17 November.
Broadcom and Brocade now anticipate the acquisition to be completed by 30 November, provided that CFIUS signals its OK. Broadcom has co-headquarters in Singapore and San Jose, California, which is also Brocade’s head office.
As TelecomFinance reported in August, Broadcom expected to close the deal in the target’s third fiscal quarter ending 30 July. And, Arris’s acquisition of Ruckus was anticipated to close around one month after.
Arris’ stock, which started on a downward trend in early August, has reversed course of late. It went up 1.7% over the last two days, trading at US$28.97 around mid-afternoon.
“We remain committed to the Ruckus acquisition and associated strategy,” an Arris spokesperson said.
Arris is using unnamed financial and legal advisers on the deal, the person added, declining further comment.
Arris had purchased Ruckus in late February, with an aim to boost its portfolio in converged wired and wireless networking technologies in areas such as education, enterprise and multi-dwelling units.
Following the transaction, Arris has said it will set up a dedicated business unit within the company to be led by current Ruckus COO, Dan Rabinovitsj. For this report, the spokesperson said those plans remain unchanged.
Arris has grown since being formed as a joint venture in 1995 organically and through acquisitions, which have included purchases of Motorola Home from Google and British set-top box maker Pace.