Brocade Acquires McData

August 9th, 2006:Storage switching market consolidates as erstwhile rivals combine. Cisco Systems facing concerted attack?

In a deal worth US$713-million (stock) Brocade has acquired long-time competitor in the storage-switch arena, McData. This represents a 48% premium on McData's closing price in the US on Monday. It has also resulted in an 18% drop in the price of Brocade stock.

This consolidation leaves QLogic, Emulex and Cisco Systems has the chasing pack in the storage switching market.

As we went online with this story, no one could be reached at the Australian offices of either Brocade or McData for comment on the deal - which is expected to be closed in early 2007. Until this time, both companies will continue to operate as separate entities maintaining their individual brands.

In terms of just how the Holy Grail of 'synergies' between the cojoined companies is concerned, in a conference call from the United States, Brocade CEO Michael Klayko was reticent to comment, merely rolling out standard platitudes such as, "We believe that the combination of Brocade and McData will significantly benefit our customers, our partners and our shareholders." You'd have to hope so.

The next stage in the endeavour will inevitably see the reactions of OEM partners such as Dell, IBM, EMC and Hewlett Packard looming large.

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