Extreme’s Aerohive acquisition to add cloud management and edge capabilities
Extreme Networks is to acquire Aerohive Networks after signing a definitive agreement to attain the latter’s shares of common stock at a price of $4.45 per share in cash. The deal is equivalent to an enterprise value of $210 million.
The acquisition will allow Extreme to add cloud management and edge capabilities to its portfolio of cloud networking solutions. It will bring new automation and intelligence capabilities to Extreme’s Elements portfolio and add cloud-managed wi fi and NAC solutions to complement its on-premises wi fi and NAC technology. It is hoped this will present numerous opportunities for cross-sell and up-sell within the combined portfolios.
Aerohive specialises in cloud management, AI and machine learning. The company has a global footprint of 30,000 cloud wireless LAN customers in verticals including education, healthcare, state and local government, and retail. Extreme expects to gain new SD-WAN capabilities, expanding its total addressable market by a total of $1 billion (in a market with a CAGR of 19 per cent 2019 through 2022.) It is also anticipated that the acquisition will expand Extreme’s mix of revenues to approximately 30 per cent from subscription recurring revenue.
Ed Meyercord, president and CEO at Extreme Networks commented: ‘The acquisition of Aerohive establishes our leadership in cloud, AI, and ML, adding a proven and mature cloud services platform and subscription service model for Extreme’s customers and partners. Extreme continues to invest in software and AI to expand the automation capabilities across our portfolio of edge-to-cloud networking solutions. The ability to improve user experiences, lower operating expenses, and deliver cloud-managed networks is key to our strategy.
‘After scaling Extreme’s business to $1B in revenue and expanding our portfolio to include end-to-end enterprise networking solutions, we are now taking the next step to transform our business to add sustainable, subscription-oriented cloud-based solutions that will enable us to drive recurring revenue and improved cash flow generation. Extreme expects this deal to be accretive to our FY20 outlook as it accelerates our plans to achieve over 60 per cent gross margin and 15 per cent operating income on an exit run rate.’
Added David Flynn, president and CEO of Aerohive: ‘This acquisition by Extreme is a major milestone for Aerohive. The role that cloud-managed technology plays in modern enterprises is impossible to overstate – it is where digital transformation is won and lost. Aerohive’s expertise and excellence in cloud management and edge technology, combined with Extreme’s extensive solutions portfolio and continued investment in software and AI for automation, gives our customers the most advanced digital experiences in the market. Together we will push networking into a new era – making infrastructure smarter, more autonomous, and the driver of business value.’