ChannelInsider citing the Wall Street Journal is reporting that network equipment maker Brocade Communications Systems Inc. put itself up for sale on 10-05-09. The paper, citing people familiar with the matter, said Oracle Corp and Hewlett-Packard Co were potential bidders for the company, but a deal was not imminent and Brocade may not even go ahead with a sale. Oracle CEO Larry Ellison told investors at Oracle’s annual shareholder conference Wednesday. “We have no interest in buying Brocade,” in response to a question from an investor according to Fortune.
To compete with much bigger rival Cisco Systems Inc, the company has been bolstering sales partnerships with large technology vendors such as IBM and Dell Inc to expand their customer reach. In an interview with Reuters last month, Brocade Chief Executive Michael Klayko had said he did not see a need for Brocade to merge with or acquire another company, citing the company’s expertise and partnerships. However, “Interest in Brocade is picking up, and it is unlikely the company put itself up for sale in the absence of third-party interest,” according to Goldman Sachs analyst Min Park. “Brocade is a likely strategic fit for a number of potential acquirers.” At Fortune, Park includes Hewlett Packard, Juniper, Dell, IBM and Oracle among those.
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It is unlikely that Dell will purchase Brocade since Dell has Perot Systems to digest and a sales partnership with Brocade. Iuniper is not in the financial postion, but is the most need of the product. IBM is financailly cpable but the hardware business seems to be losing focus at Big Blue. That leaves HP for three reasons, first it is financially capable, second it is looking to grow its ProCurve business and its EDS acquisition is well underway. The wild card could be Huawei, if they can get government approval. Of course, Brocade CEO Mike Klayko, just may have needed some extra pocket money as the Wall Street Journal article triggering a 14 percent jump in the company’s shares. Mr. Klayko’s $5 million in options increased by $700,000 in one day.
