Shares of Brocade Communications Systems soared more than 9 percent Wednesday after chipmaker Broadcom agreed to buy it for $5.9 billion.
"This strategic acquisition enhances Broadcom's position as one of the leading providers of enterprise storage connectivity solutions to OEM customers," said Hock Tan, president and CEO of Broadcom, in a statement.
Earlier this week, a Bloomberg report said Broadcom was interested in purchasing the company.
Brocade shareholders will receive $12.75 per share in all cash-transaction valued at about $5.5 billion, plus $400 million of net debt, the company said. That's a 47 percent premium from Brocade's closing price on Friday. Brocade's board and the Executive Committee of the board of directors of Broadcom have unanimously approved the transaction.
Broadcom said it plans to divest Brocade's IP Networking business.
Brocade's stock is up more than 34 percent this year.