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Brocade Gets FTC's Blessing

Now that the Federal Trade Commission (FTC) has offered its approval, the Brocade-McData deal could be days away from becoming reality. (See FTC Approves Deal and Brocade Bags McData For $713M.)

Brocade said Tuesday night the FTC has closed its antitrust review of the $713 million deal, and the waiting period under the Hart-Scott-Rodino Antitrust Act has expired. (See Brocade-McData Draws Extra Scrutiny.) Shareholders from both SAN switch vendors will vote on the deal Thursday, and Brocade expects the deal to close Monday if shareholders approve.

The FTC's blessing was considered the biggest obstacle. The FTC took longer than usual to sign off on the deal because FTC lawyers -- and perhaps some of its five commissioners -- favored blocking the deal. But industry sources say the FTC commissioners were convinced they did not have sufficient opposition from customers or shareholders to block the deal.

In a Byte and Switch poll, 82 percent of the 200-plus respondents said the FTC should approve the deal because of sufficient remaining competition from Cisco and QLogic. Industry sources estimate Brocade's market share would be between 60 percent and 70 percent in directors and from 75 percent to 80 percent in fabric switches after the merger.

Investors reacted positively to the FTC's decision this morning. Brocade's stock price rose from $8.58 to $8.77 by mid-day, and McData's shares went from $6.33 to $6.55.

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