Brocade's Foundry buy rescued by £600 million loan

But others take a hell of a beating.

By Stephen Lawson, IDG News Service
Published: 14:45 GMT, 08 October 08

Brocade has secured a $1.1 billion (£600 million) loan to fund its acquisition of Foundry Networks despite a tightening of credit markets.

The loan came through even as the Dow Jones fell more than 500 points (5.11 percent), and many technology stocks dropped even more steeply.

Among those hardest hit were Sun, Nortel, Amazon, and Qwest Communications International, all down more than 10 percent. Apple shares went down 9.25 percent while Google suffered less damage, falling 6.79 percent. As they did in the bloodbath last Monday, most major tech stocks, including Microsoft and Cisco Systems, outpaced the Dow in their journey down on Tuesday.

Brocade's planned acquisition of Foundry, announced in July, will expand the storage-area-networking pioneer into the Ethernet LAN business for an end-to-end set of offerings. Brocade said in July it would exchange a combination of stock and cash for each Foundry share, partially funding the deal with about $1.5 billion of debt financing from Bank of America and Morgan Stanley.

Such arrangements are common, but by the time Brocade held an analyst meeting in mid-September to lay out its plans for Foundry, Wall Street investment banks were already teetering and stocks were on their way down. Financial analysts at the event repeatedly asked Brocade CEO Michael Klayko about the financing of the deal, and he said each time that he was confident it would come through.

Brocade said on Tuesday that it had got a $1.1 billion term loan facility and a $125 million revolving credit facility. Bank of America led the funding, joined by Banc of America Securities, Morgan Stanley Senior Funding and other institutions. Brocade also said it expects to raise as much as $400 million in additional financing. Brocade stuck by its forecast that the acquisition would be completed by year's end.

What are your views on this subject? Use the form below to post a comment on this article up to 500 characters.

Characters remaining: 500

Add your commentComments

PAMELA | Published: 06:23 GMT, 02 November 2008

SOMEBODY GIVE US GOOD IDEAS,IT’S A GOOD BIGGINING FOR STOCK MARKET ISN’T IT?

Related SME news

NASA's Endeavour blasts off on last mission to space station

Six astronauts, including Brit Dr Nicholas Patrick, head to last night flight

09 February 2010

World IT spending to grow in 2010, says IDC

Analyst claims increase of 3 percent

Government could breach filesharers human rights with bans

Parliamentary Select Committee warns of Digital Economy Bill

Dell loses Inspiron laptop lawsuit appeal

Faulty portables lead to class action suit

Related SME reviews

Xerox WorkCentre 3220 review

HP Scanjet G3110 review

Dell Latitude E4300 review

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

Techworld White Papers

Challenges and opportunities of PCI

The Payment Card Industry Data Security Standard provides an enterprise structure for improving operational, security, and audit performance. The benefits of the PCI DSS go beyond audit costs and results.

Download Whitepaper

Database security: Preventing enterprise data leaks at the source

IDC discusses the growing internal threats to business information, the impact of government regulations on the protection of data, and how enterprises must adopt database security best practices...

Download Whitepaper

Six essential steps to successful IT centralisation

This report, based on the real experience of a recent centralisation project, is aimed at those involved in IT strategy within their organisation. It provides some practical insights for CIOs, CTOs, Heads of IT, IT Directors and those involved more closely with the service management function.

Download Whitepaper

Application Grid: The ideal platform for IT consolidation

Evaluating the opportunity for consolidation of middleware — Java application servers and related technologies.

Download Whitepaper

Techworld UK - Technology - Business

COLT White Paper

Are all VoIP services the same?

Questions to ask your service provider to ensure you get the VoIP service you need
With careful choice of partner, your business can have all the advantages of VoIP access - reduced costs, flexibility and simplicity - without the drawbacks.
This white paper is your guide to ensure you get right the VoIP service and details the pitfalls which businesses would do well to avoid.

Download white paper
COLT White Paper

IT Misuse Survey

Complete this survey and you could win a Nexus One

Techworld are running a short survey to discover how UK businesses are managing Internet and email misuse in the Enterprise.

Complete Survey

Webcast: IT Financial Management: Cost Optimisation for Efficiency and Agility.
On Demand Webcast
Join this webcast to learn about the techniques and technologies that can help you prove the value of IT to the business by understanding the true cost of today's IT services and those that will be necessary to deliver future success.

Register Today

Site Map

IDG Network

* *