Arris to pay $800m to buy Ruckus from Broadcom/Brocade

As widely anticipated, cable supplier Arris is to acquire Ruckus Wireless when the carrier WiFi firm’s current owner, Brocade, is taken over by Broadcom later this year.

Brocade/Broadcom will not quite get the $1bn which was predicted at the start of the year by Reuters sources, but it will get $800m for Ruckus, along with the Brocade ICX business, which makes data center, campus and carrier Ethernet switches. This is a drop from the $1.2bn which the company paid for Ruckus last April, when it was trying to expand its wireless and service provider activities by acquiring a leading public WiFi equipment vendor.

Only a few months later, Broadcom said it was buying Brocade, primarily for its Fibre Channel storage network business, and that it would offload some other units including Ruckus. Now, Ruckus and ICX will become a business unit within Arris, led by current Ruckus COO Dan Rabinovitsj.

As well as carrier and enterprise WiFi, Ruckus had started moving into cellular technologies, particularly for private networks, with an indoor LTE system called OpenG. Among other bands, this can run in the US 3.5 GHz CBRS shared spectrum. Given that cablecos are interested in using shared bands to support their own subnets of cellular small cells – to  support residential or business customers while minimizing their reliance on MVNO deals with mobile operators – this could be a very strategic product for Arris.

For Arris, being able to incorporate a capable WiFi service into its CPE and set-top devices would appeal to the cable companies and telcos looking to leverage their broadband lines to add quad play offerings to their line-up. The broadband line can provide backhaul for a distributed WiFi network that would form part of a mobile offering, which would give customers access to WiFi hotspots wherever there was a TV or broadband customer, and wider access to national cellular networks via an MVNO agreement.

Arris’ CFO has told investors that it might transition into providing the wireless requirements of its CPE customers. Buying Ruckus will follow the $2.1bn acquisition of its UK-based set-top box rival Pace, and shore up its top spot in that sector with a $5.5bn market cap. After consolidation, it seems it may also be eyeing new lines of business.