Brocade reduces Foundry Networks buyout bid

Networking company revises its offer price for the switching and routing provider to $2.6 billion. And Wall Street appears encouraged that the deal is alive.

Shares of Foundry Networks soared more than 17 percent in premarket trading Thursday, after the company announced last evening that its merger with Brocade was still alive but at a lower purchase price.

Under the revised agreement, Brocade reduced its purchase price for the Santa Clara, Calif.-based switching and routing provider to approximately $2.6 billion from its initial agreement of $3 billion . Foundry shareholders are entitled to receive $16.50 a share in cash for every share of the company they own, verses $18.50 a share in cash and 0.0907 shares of Brocade common stock in exchange for each share of Foundry common stock under the prior agreement.

Foundry shares rose as high as 17.8 percent, to $15.32 a share, in premarket trading, giving its stock a much needed lift after it suffered a blow last week, when the company adjourned its special shareholders meeting to vote on the initial deal .

At the time, Foundry's shares plummeted 26 percent, to $12.67 a share, when the company adjourned its meeting on Friday and rescheduled it for Wednesday. The company's proxy allowed for an adjournment of the meeting if it failed to get enough shareholder votes.

The companies, however, have pushed back the special shareholder meeting to November 7, in order to allow time to finalize the agreement's documentation. The shareholder meeting is now scheduled to reconvene at 4 p.m. PDT.

Featured Video
6
This content is rated TV-MA, and is for viewers 18 years or older. Are you of age?
Sorry, you are not old enough to view this content.

Top 5: Cars with best resale value

Brian Cooley runs down the top five US automobiles with the best resale value in 2015, five years after original sale.

by Brian Cooley