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US banks to part-fund Foundry acquisition

Alex Scroxton

Storage specialist Brocade has secured a $1.2bn (£687m) combined loan and revolving credit facility from the Bank of America, Morgan Stanley and HSBC as it seeks to wrap up its purchase of networking specialist Foundry Networks.

According to Brocade, the proceeds of the loan will finance a portion of the deal initially announced in July.

Although the acquisition has passed regulatory approval in the US, Foundry shareholders have yet to vote on the deal, which is scheduled to close by the end of the calendar year.

Brocade's $3bn takeover of LAN specialist Foundry has been seen as an attempt by the firm, which is strong in the SAN market, to boost its competitiveness.

Investors clearly welcomed the injection as Foundry shares shot up over 9% in after-hours trading yesterday, while Brocade stock saw a more modest gain after yet another torrid day on the markets for US tech firms.

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