Extreme Networks has agreed to acquire Aerohive Networks for USD 272 million. The deal strengthens its portfolio in WLAN networks and cloud management and edge applications, as well as boosting subscription revenue.
Excluding Aerohive's USD 62 million in cash at the end of March, the price represents an enterprise value of USD 210 million. Extreme is paying USD 4.45 per share in cash, compared to Aerohive's last closing price of USD 3.20 per share. The company expects the takeover to add to adjusting earnings starting in fiscal year 2020.
Extreme Networks said Aerohive is a leader in cloud management, being among the first companies to offer controller-less Wi-Fi and cloud network management. It also recently delivered the first trio of Wi-Fi 6 access points, along with the first pluggable access point. It has a global footprint of 30,000 cloud wireless LAN customers in verticals including education, healthcare, state and local government, and retail.
The company expects to gain new SD-WAN capabilities also, in all expanding its total addressable market by USD 1 billion in a market with a CAGR of 19 percent from 2019 through 2022, according to IDC. In addition, Aerohive will expand Extreme's mix of revenues to approximately 30 percent from subscription recurring revenue.
The takeover is subject to regulatory approval and is expected to close in Extreme's fiscal Q1. Extreme expects to fund the acquisition from a combination of available cash and committed debt financing.
