Extreme Networks bought Aerohive for $272M

In a bid to position Extreme Networks as a key player in the end-to-end enterprise networking space, Extreme Networks bought Aerohive Networks for $272 million in cash. The Milpitas-based Wi-Fi router maker Aerohive Networks jumped 39 percent in early trading today.

Extreme will pay $4.45 per share in cash for Aerohive, and plans to complete the deal before the end of 2019. The deal has already been approved by the boards of both Aerohive and Extreme. The shares of Extreme Networks gained more than 4 percent in early trading on the news.

Aerohive specializes in commercial Wi-Fi routers, and has more than 30,000 customers and 10 million daily users. It employs about 460 people, mostly in Milpitas. The company was founded in 2006 by former Juniper Networks engineer Changming Liu and raised about $105 million in venture capital before going public in 2014. Liu served as the company’s CTO until early 2018, when he stepped down to launch Santa Clara-based security analytics company Stellar Cyber.

Post-acquisition of Aerohive will help Extreme boost its revenue in the coming year to around $1.1 billion. “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 Networks CEO Ed Meyercord said in a statement.

Extreme expects this deal to be accretive to our FY20 outlook as it accelerates our plans to achieve over 60% gross margin and 15% operating income on an exit run rate.