Merger Watch: Foundry Networks - Brocade

This article from NetworkWorld provides a very clear and helpful overview of the Foundry Networks (FDRY) - Brocade (BRCD) transaction, particularly with respect to the deal's rationale, which is creating stronger competition for industry giant Cisco (CSCO). The fact that Cisco has come to essentially dominate the networking hardware industry over the last decade or so makes transaction such as this inevitable and, quite frankly, necessary. In other words, this deal is a complete non-issue with respect to competition issues and related regulatory delays.

For the record, FDRY identifies the following as its primary competitors, with Cisco quite naturally singled out:

In addition to Cisco, we compete against 3Com, Alcatel-Lucent, Enterasys Networks, Extreme Networks, F5 Networks, Inc., Force 10 Networks, Hewlett-Packard, Huawei Technologies, Juniper Networks and Nortel Networks.

FDRY's recent SEC history shows no serious problems in the form of major revisions to the company's primary filings. Its last encounter with the SEC occurred in 2003 when its annual report needed some minor revisions before being accepted. Other than that, FDRY has had a few late 10-Qs as recently as 2006, none of which were pulled for review.

Based on the above, an unusually lengthy SEC merger proxy review is generally not anticipated for this transaction. Indeed, no regulatory delays appear likely at this time. Assuming the first proxy statement is filed in a mid/late-August time frame, the current closing projection is first two weeks of November, with a small chance of a late-October close if the proxy is filed early and an SEC waiver is granted.

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