Brocade, Foundry lower price of merger

Brocade Communications and Foundry Networks this week said they have agreed to amend their July merger agreement to reduce the price Brocade will pay for the network equipment company.

Under the agreement in principle, Foundry's shareholders would be entitled to receive US$16.50 in cash for each share of Foundry common stock. The revised transaction would have an aggregate purchase price of approximately $2.6 billion, still making it one of the biggest technology M&A deals this year.

Initial terms called for Brocade to pay more than $19 per Foundry share, for an aggregate value of $3 billion. The amended agreement comes as the economy continues to decline, bringing down the value of companies with it.

Foundry's stock closed at $13 on Wednesday.

Foundry postponed a shareholder vote on the merger last week, and rescheduled it for this Friday. But that, too, has been postponed until Nov. 7 at 4 p.m. PST to allow the companies to finalize the new terms and shareholders to mull the reduced offer.

Foundry's stock plummeted more than 25% last Friday when it announced the first postponement of a shareholder vote on the deal.

The companies are combining to compete more effectively with Cisco in the data center.

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