Advancing its push into the wireless service business, Arris completed its acquisition of the Ruckus Wireless and ICX Switch businesses from Broadcom Friday.
Closure of the $800 million deal, which was initially announced in February, comes about two weeks after Broadcom wrapped up its $5.5 billion merger with Brocade Systems. Brocade, which owned Ruckus and ICX, was expected to be acquired in July, but the deal was delayed numerous times before finally wrapping up last month.
Dan Rabinovitsj, the previous COO of Ruckus Wireless, will serve as president of Arris’ new Enterprise Networks business segment. Ruckus Networks, an Arris company, as it’s now called, will operate as dedicated business under the Enterprise Networks unit.
About 1,700 Ruckus Wireless and ICX Switch employees are joining Arris as part of the deal.
Arris intends to leverage Ruckus’ assets to extend its offerings in converged wired and wireless networking technologies beyond the home, including into education, public venue, enterprise, hospitality and MDU. Ruckus’ early development work on small cell CBRS LTE products also presents an opportunity to deploy converged WiFi and LTE using common cloud-based control and management capabilities, according to Arris.
“This combination underscores our shared vision of achieving market leadership across wireless and wired networks in close partnership with our valued customers and channel partners,” Rabinovitsj said in a statement. “We’re very excited about the collaboration opportunities across our product portfolios to enable connectivity from the office to the home and to all the places in between. Joining ARRIS means we still do what Ruckus does best, but on a larger, global scale.”
After Broadcom closed on Brocade in November, BTIG Research analyst Walter Piecyk wrote that Ruckus “can be a transformational acquisition that will help return Arris to organic growth despite the obvious challenges for set-top boxes.”
“We are increasingly optimistic about the new revenue opportunities available to Ruckus based on the broadening interest in 3.5 GHz spectrum as an early 5G building block for cable, wireless and even technology companies,” Piecyk noted. “In addition, we believe Ruckus’ legacy enterprise WiFi business has stabilized after the weakness created by the disruption from Brocade. Finally, Arris strong free cash flow will enable it to retire at least 20 percent of its share count over the next two years, if the stock does not adequately respond to its return to growth in 2018.”
Arris will hold a conference call at 8 am ET on Dec. 14 to provide an update on Ruckus Networks.
“It’s an important milestone, not only for Arris but for our industries. Ruckus’ unmatched expertise in wireless and wired networking perfectly complements our growth strategy of driving towards a constantly connected, mobile future,” Arris CEO Bruce McClelland said in a statement. “The acquisition brings diversification to our portfolio, building on our strength in networking and helping us to serve new verticals. Ultimately, our combined portfolios and scale will help our customers and partners deliver a smart, simple connected world for billions of people.”