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Arris Nears Deal to Acquire Brocade’s Networking Business

February 22, 2017

IP telephonyIP telephony
Berlin, Germany - October 23: A network cable is plugged into a router in the connection for IP telephony on October 23, 2015 in Berlin, Germany. Thomas Trutschel Photothek via Getty Images

Set-top box maker Arris International is nearing a deal to acquire Brocade Communications Systems’s networking equipment business for roughly $1 billion, people familiar with the matter said on Tuesday.

An acquisition of the Brocade unit, which makes equipment that boosts high-speed Internet service for consumers and businesses, would add a suite of products to Arris’ portfolio that can serve areas with high demand for bandwidth, such as universities and airports.

The deal could be announced as early as Wednesday, the sources said, cautioning there was always a chance for the negotiations to end without a deal. The sources asked not to be identified because the discussions were confidential.

Arris and Brocade (BRCD), which is set to be acquired by chipmaker Broadcom (BRCM) in a $5.5 billion deal that is pending regulatory approval, declined to comment.

The divestiture of Brocade’s networking unit, if completed, would be the first sale of assets that Broadcom is aiming to complete, and likely the most valuable, the sources said.

Broadcom has said that it plans to sell Brocade’s networking business to avoid competing with its top customers such as Cisco Systems.

Broadcom declined to comment.

Most of the unit, known as the “network edge” business, was obtained by Brocade as part of its $1.5 billion acquisition of Ruckus Wireless last year.

Reuters reported last month that Suwanee, Georgia-based company Arris was one of the bidders for the unit.

Arris, which has a market capitalization of $5.6 billion, makes electronics such as modems and set-top boxes used by cable and satellite companies. It closed a deal last year to buy British rival Pace for $2.1 billion, and incorporated itself in Britain in a deal structured as a corporate tax inversion.