Brocade, Foundry agree to revised buyout terms

Foundry shareholders will vote on the takeover offer sometime in December. The deal is supported by the network equipment maker's board of directors.

In July, data storage maker Brocade offered $19.25 per share, or $3 billion for Foundry in the hopes that the combined company will challenge rival Cisco Systems Inc.'s dominance in the Internet networking equipment market. But the company later lowered its bid, amid Wall Street concerns about integration risks and weak corporate spending on capital equipment in the current credit environment.

Foundry had postponed a shareholder vote on the matter until details could be agreed upon.

Under the new agreement, Foundry's shareholders may also receive proceeds of the sale of the company's auction rate securities portfolio if the company is able to liquidate those assets before the buyout is completed.

That money--up to $50 million--would be distributed to Foundry shareholders through a dividend.

The transaction is expected to be completed by the end of the year. Brocade expects to finance the acquisition from various financing sources, including cash on hand at both companies and proceeds from a $1.1 billion term loan facility already deposited into a restricted Brocade account pending the deal's closing.

Brocade shares rose 9 cents, or 2.4 percent, to finish at $3.84 Friday, and jumped 11 cents to $3.95 after-hours following the news. Foundry shares ended up 26 cents to $14.44, and jumped $1.36, or 9.4 percent, to $15.80 in aftermarket electronic trading.