NEW YORK (TheStreet) -- Shares of Brocade Communications Systems (BRCD) are falling 15.37% to $9.01 on heavy trading volume Monday morning as the company will buy Ruckus Wireless (RKUS) in a deal valued at about $1.5 billion.
Ruckus stockholders will receive $6.45 in cash and 0.75 shares of Brocade common stock for each Ruckus share, according to a statement.
Based on Brocade's closing price on Friday, the deal values Ruckus at a price of $14.43 per share, or about $1.5 billion.
The transaction is valued at approximately $1.2 billion, net of estimated cash acquired, the statement said.
"The acquisition will complement Brocade's enterprise networking portfolio, adding Ruckus' higher-growth, wireless products to Brocade's market-leading networking solutions," the companies stated, "It will also significantly strengthen Brocade's strategic presence in the broader service provider space, with Ruckus' market-leading Wi-Fi position."
Brocade expects the acquisition to add to its adjusted earnings per share by the first quarter of fiscal 2017.
San Jose, CA-based Brocade provides networking hardware, software and services.
Ruckus is a supplier of wireless network equipment and is headquartered in Sunnyvale, CA.
Shares of Ruckus are skyrocketing 30.1% to $13.01 on heavy trading volume Monday morning. Roughly 12.36 million of the company's shares changed hands this morning, higher than its average volume of 676,382 shares per day.
About 10.43 million of Brocade's shares were traded so far today, above its average volume of 3.96 million shares per day.
Separately, TheStreet Ratings Team has a "Buy" rating with a score of B on Brocade stock.
This is driven by a number of strengths, which should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks covered.
The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels, impressive record of earnings per share growth and good cash flow from operations.
The team believes its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: BRCD