Partners Feel Frustration As Broadcom's Acquisition Of Brocade Faces More Delays

Once again, Broadcom's blockbuster $5.9 billion acquisition of Brocade Communications is being delayed, sparking concern in the Brocade-Ruckus channel.

"I mean, will this ever end? We want to move forward to the next step to get our Ruckus and switching business stabilized and there's just a plethora of consistent delays preventing that," said one executive from a solution provider who partners with Brocade and Ruckus, who did not wish to be named. "I think [the acquisition] will still happen, but it's proven to be significantly more complex than they originally thought, which hasn't been good for the channel."

"The continued delays only further cause more support issues and things like that across the board," said a top executive from a solution provider and Ruckus-Brocade partner based on the East Coast, that did not want to be identified. "It's definitely an area of concern, and certainly their competitors are using this as a soapbox moment to comment on the instability of the acquisition."

Broadcom's acquisition of Brocade, which was first unveiled in November, was set to be completed on or before Aug. 1. However, the Committee on Foreign Investment in the United States (CFIUS) halted the process in July to further review the deal. The acquisition was then expected to close by the end of October. Under the agreement, the vendors could have walked away from the deal on Nov. 1 if it still hadn't closed.

[Related: Ruckus' New Channel Leader: 'We're Going To Come Out Of This Stronger Than Ever Before']

On Oct. 2, following discussions with the CFIUS, Brocade and Broadcom withdrew and re-filed their notice to the CFIUS to allow even more time for review and discussion, according to a Brocade filing with the United States Securities and Exchange Commission.

Under the new agreement, Brocade now anticipates the acquisition to be completed by Nov. 30.

"[We] remain fully committed to the merger and will continue to work diligently and cooperatively to close the merger. There can be no assurances, however, that CFIUS will ultimately agree that the parties may proceed with the merger," said Brocade in the filing.

Once the Broadcom-Brocade deal closes, Brocade plans to immediately sell its network-edge portfolio -- which includes Ruckus Wireless and ICX Switch product families -- for $800 million to Arris International.

Partners who attended Ruckus' recent Big Dog Partner Conference said the message to the channel was clear, 'It's business as usual.'

One top solution provider based on the East Coast said some customers are concerned about the status of Brocade's switching line.

"What we've heard from customers is they're not [worried] on the Ruckus Wireless side of things. In their minds, the Ruckus Wireless is okay, but the Brocade switches, they don’t see that as clean," said the East Coast solution provider executive. "The customers are having some concerns about the switching side of the business. The wireless they feel pretty confident about. From a partnering standpoint, we're still cautiously optimistic about how everything is going to land."

On Tuesday, Extreme Networks decided not to wait until the Broadcom-Brocade acquisition closed to acquire Brocade's data center business.

Extreme had initially planned to acquire Brocade technology assets immediately after the Broadcom-Brocade acquisition closed but instead opted to buy the assets directly from Brocade due to the delays.

Arris said it is still "committed" to acquiring Ruckus and Brocade's ICX switch business regardless of the new delay.

"The refiling of Broadcom's notice with CFIUS delays the closure of ARRIS's deal, but Arris remains committed to our acquisition and associated strategy," said Arris, in a statement on Tuesday.

Ruckus did give channel partners a boost of confidence last month by unveiling a revamped Partner Program that will be implemented by Arris once the acquisition closes. Ruckus also named a new channel leader, Raelyn Kritzer, who will be leading the channel charge for partners.

Brocade has sold many other technology assets to various vendors over the course of 2017. The vendor sold its Vyatta Software Platform to AT&T, its virtual application delivery controller business to Pulse Secure, and its virtual packet core business to Mavenir.

Brocade is shedding hundreds of positions before its acquisition by Broadcom. A total of 230 employees based in the U.S. have accepted a voluntary separation plan and are set to leave Brocade during the company's current fourth fiscal quarter, which ends Oct. 28.