This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Foundry Network Shares Rise on Deal

Shares of networking equipment maker Foundry Networks (FDRY ) rose more than 5% Wednesday ahead of its impending $3 billion acquisition by Brocade (BRCD - Get Report).

The boost, which sent Foundry shares up to $17.10 in early trading, came a day after storage switch specialist Brocade secured a $1.1 billion loan and a $125 million revolving credit facility to fund its Foundry acquisition late Tuesday, which pushed the stocks of both firms up in after-hours trading.

"Foundry is trading at a significant discount to its acquisition price, which provides opportunity for investors," Pacific Growth Equities analyst Kaushik Roy said Wednesday in an research note. "Foundry stock closed yesterday at $16.26, which is significantly below what Brocade is offering: $18.50 (Cash) + 0.09 Brocade shares."

"The (Foundry) shareholder vote is on October 24th -- we believe Brocade should be able to close the deal shortly after," said Roy. "This $1.1B financing announcement should provide some comfort to Foundry shareholders -- we believe that the probability of Brocade's ability to close the deal is very high."

Brocade, which sells switches that use the Fibre Channel storage protocol, hopes its acquisition of Foundtry's Ethernet technology will put it a better position to compete with Cisco (CSCO - Get Report) and Juniper Networks (JNPR ) through its acquisition of Foundry's Ethernet technology.

"Despite some merger risks we believe with the acquisition of Foundry, Brocade could be one of the top two vendors for end-to-end networking solutions," Roy writes. "In our opinion investors are overly concerned about competitive threats from Cisco -- we expect Brocade to remain the dominant provider of Fibre Channel switches throughout the life of the Fibre Channel technology."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BRCD $7.94 -0.94%
CSCO $26.19 -0.08%
EMC $26.22 -0.19%
JNPR $22.36 0.09%
AAPL $92.72 -0.56%


Chart of I:DJI
DOW 17,604.69 -56.02 -0.32%
S&P 500 2,040.89 -9.74 -0.47%
NASDAQ 4,686.5440 -30.55 -0.65%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs