Extreme Networks Plans To Acquire Aerohive To Boost Wi-Fi Chops, Subscription Services

The deal is aimed at strengthening Extreme's leadership position in cloud management, wireless networking and SD-WAN and is expected to raise Extreme’s revenue mix to about 30 percent from subscription recurring revenue.

Consolidation struck the wireless market once again Wednesday as Extreme Networks revealed plans to scoop up competitor Aerohive Networks for $210 million.

Extreme said that the deal will strengthen its leadership position in cloud management, wireless networking and SD-WAN. The combination will also boost the company's subscription and services business, according to San Jose, Calif.-based Extreme.

"This is a great move," said David Black, president and CEO of solution provider Insource Technology, an Aerohive channel partner. "I'm really glad to hear that because I think [Aerohive] needs to partner with a good switch manufacturer, which Extreme is."

The deal also will strengthen Extreme's wireless portfolio, Black said. "I think nowadays you can have the best switches, but if you don’t have fantastic Wi-Fi, it's going to be tough. Extreme picked up a great company."

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Via the terms of the transaction, Extreme plans on acquiring all outstanding shares of common stock of Aerohive for $4.45 per share in cash, which represents an aggregate purchase price of approximately $272 million. Accounting for Aerohive’s net cash balance of $62 million at the end of March, the deal is equivalent to an enterprise value of $210 million, the companies said.

Extreme will gain Aerohive's cloud management and edge capabilities, while also boosting its position in the competitive wireless LAN market. Extreme also expects to gain new SD-WAN capabilities.

Perhaps most importantly, Aerohive will grow Extreme’s revenue mix to approximately 30 percent from subscription recurring revenue, the companies said.

Milpitas, Calif.-based Aerohive has about 30,000 enterprise customers in verticals including state and local government, education, health care and retail.

Aerohive, which does 100 percent of its business through the channel, has always had a very strong partner strategy, Insource's Black said. "They have one the best partner programs and support you could ever want and they are continuing to invest in the partner channel, so I hope that continues with Extreme."

Earlier this month, Aerohive introduced a new partner portal built on Salesforce Partner Communities that the company said would better serve its channel partners by offering more efficiency through the entire channel process and enhancing the user experience.

The board of directors at Extreme and Aerohive have already unanimously approved the terms of the agreement. The deal is subject to customary conditions and is expected to close during Extreme's first quarter of the fiscal year 2020.