Brocade Communications System Inc has received first-round bids from a handful of potential buyers as the company explores a sale, sources familiar with the matter said.
Shares of the San-Jose, California-based maker of switches and routers for managing data traffic jumped more than 9 percent on Monday to $5.90 per share after Reuters reported the company was exploring a sale.
Brocade, which has a market value of nearly $2.7 billion, hired Frank Quattrone's Qatalyst Partners in November to focus on a deal that could result in a leveraged buyout, the sources said.
Sources said Brocade has held talks with at least a half dozen potential private equity buyers. Among them are Silver Lake Partners TPG Capital LP, KKR & Co LP, Blackstone Group LP, Bain Capital and Warburg Pincus LLC.
A Brocade spokesperson declined to comment. Qatalyst Partners did not return calls for comment. All of the private equity firms mentioned declined comment.
The current sale process marks at least the third attempt that Brocade has tried to sell itself. In 2009, the company held talks with Hewlett-Packard Co, but those discussions fell apart over price expectations, the sources said. Hewlett-Packard instead acquired networking company 3Com Corp for $3.1 billion.
Since then, private equity firms have been meeting with Brocade management about a deal, two of the sources said.
In 2010, one private equity firm came close to negotiating a deal with Brocade, but those talks also fell apart over a price discrepancy, one of the sources said.
The latest decision to sell comes after the board authorized a process involving a potential private equity buyer, bringing Qatalyst Partners back as its adviser.
Sources cautioned that, like Brocade's previous sale attempts, no deal may materialize this time around.
(Reporting by Nadia Damouni; additional reporting by Greg Roumeliotis; Editing by Gerald E. McCormick, Peter Lauria and Andre Grenon)