Extreme Networks (EXTR) Stock: Gains On Data Center Networking Acquisition


Extreme Networks, Inc (NASDAQ: EXTR)

Extreme Networks is having an incredible time in the pre-market trading hours today, and for good reason. The company announced the acquisition of a key asset. As a result, an investor frenzy ensued, leading to big gains. Of course, our partners at Trade Ideas were the first to alert us of the movement. At the moment (9:12), EXTR is trading at $7.85 per share after a gain of $1.39 per share or 21.52% thus far today.

EXTR Acquires Data Center Networking Business

As mentioned above, Extreme Networks is having an incredibly strong day in the market today. That’s because the company has made the decision to acquire Brocade Communications Systems, Inc’s data center switching, routing, and analytics business from Broadcom Limited (NASDAQ: AVGO).

The acquisition will come at a price of $55 million, to be paid in an all-cash transaction. $35 million will be paid at closing and $20 million will be paid through deferred payments. There’s also the potential for additional performance based payments to Broadcom over the next five years. In a statement, Ed Meyercord, President and CEO at EXTR had the following to offer…

The addition of Brocade’s data center networking business significantly strenghtens our position in the expanding high-end data center market and reinforces our strategy of delivering software-driven networking solutions focused on enterprise customers… As Extreme is the only pure-play end-to-end, wired and wireless enterprise IP networking company in the world, we believe Brocade’s data center customers will benefit from our dedication to delivering high-quality, software-driven, secure networking solutions and the industry’s highest rated customer support. Today’s announcement, coupled with our recent announcements regarding our position as the stalking horse bidder of Avaya’s networking business and the successful completion of the integration of Zebra’s wireless LAN business, along with Extreme’s organic investments in R&D, will result in a state-of-the-art, newly-refreshed portfolio of enterprise solutions for our customers.”

What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will be keeping a close eye on EXTR. In particular, we’ll be watching to see the continued evolution of the company as they continue to become larger through acquisitions and R&D efforts. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

What Do You Think?

Where do you think EXTR is headed moving forward? Join the discussion in the comments below or on StockTwits!

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[Image Courtesy of Pixabay]


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