(Reuters) - Network gear maker Brocade Communications Systems Inc said on Monday it would buy Ruckus Wireless Inc in a cash and stock deal worth about $1.5 billion to add Ruckus's Wi-Fi products to its enterprise networking business.
Based on Friday's closing prices, the deal values Sunnyvale, California-based Ruckus at $14.43 per share, a premium of 44 percent.
Ruckus's shares jumped to $13.18 in premarket trading on Monday, while Brocade's stock dropped 12.6 percent to $9.30.
Ruckus stockholders will get $6.45 in cash and 0.75 share of Brocade common stock for each share held.
Net of Ruckus's cash on hand, the deal value is about $1.2 billion, the companies said.
The cash portion of the deal will be funded with cash on hand and a new loan, they said.
San Jose-based Brocade also raised its share buyback program by $800 million, taking the total remaining under the existing program to about $1.7 billion.
The company said it expected the deal to add to its adjusted earnings by its first quarter of fiscal 2017.
Chief Executive Selina Lo will continue to lead the Ruckus business, reporting to Brocade Chief Executive Lloyd Carney.
(Reporting by Abhirup Roy in Bengaluru; Editing by Anupama Dwivedi)