This morning, semiconductor company Broadcom announced that it will acquire IP and storage networking company Brocade for $5.9B. The transaction is expected to close in mid-2017, subject to regulator and stockholder approval. We’ve been hearing chatter about a potential deal since last week and have been wracking our brains over how an acquisition of a systems supplier by a component supplier could make sense, given that the go-to-market for a system vendor is completely different from that of a component vendor, and Brocade competes with many of Broadcom’s customers. With the official announcement, we get a bit more clarity: after the closing, Broadcom plans to divest Brocade’s IP networking business, which includes WLAN, Ethernet switches, routers, and networking software, and only hold onto Brocade’s storage area networking (SAN) business, which today is largely an OEM business. In its investor presentation, Broadcom states, “Brocade’s Fibre Channel SAN business is consistent with Broadcom’s business model.” Left unsaid is that the IP networking business is not.