Brocade buys Foundry

$3 billion clams, or about a 50% premium, which seems really high to me if I'm reading it right. Foundry seems to have a ton of cash and short term investments so that takes the real buy number down to roughly $2.3 Billion – which is below the afterhours cap that has them close to $2.5 as I write this.

Makes sense at first blush – both in the core data center, both need to fight off Cisco. Foundry has core Ethernet switching stuff, Brocade sits in all the big company SAN's. Combined company will be about $1.8 Billion, which isn't too shabby.

Interestingly Foundry has a 3.2X revenue multiple vs. Brocades 2.3X, so why not have called it a merger, saved some dough (instead of the big premium) and positioned it to drag Brocade up in multiple vs. Foundry down?

After an extensive 11 minute analysis, I like it.