On the same day it announced a 12 per cent spike in quarterly revenues, networking vendor Foundry Networks announced it is set to be snapped up by storage vendor Brocade in a deal worth $3bn (£1.5bn).

The two companies have entered into a definitive agreement and both boards of directors have given the buyout the green light. The acquisition is now subject to approval by Foundry stockholders, as well as regulatory approval and other closing conditions. Brocade intends to finance half the deal's cost through cash and the remainder through committed debt financing from the Bank of America and Morgan Stanley Senior Funding.

Foundry was founded in 1996 and now has over 1,000 employees across locations in Europe, America and the Far East. Brocade claimed it hoped the purchase would enable it to become a major force in the networking market.

Brocade chief executive Mike Klayko said: "We believe the industry is at an inflection point in the way enterprise and service provider networks and data centres are being architected. Customers are demanding networking solutions that meet the needs for today and can address the many advances in network convergence that are still ahead.

"Brocade has taken an important step through this acquisition in developing a networking infrastructure strategy that will serve as the foundation for capitalising on these dynamic opportunities."

Foundry president Bobby Johnson added: "Brocade and Foundry bring complementary strengths to the table in terms of technology leadership, product portfolio and the ability to capitalise on key market trends. Together we believe we will be a much stronger entity with a compelling value proposition to compete more effectively in and across our respective markets."

Foundry also announced Q2 2008 turnover had risen 12 per cent year-on-year to $160.7m, almost 15 per cent of which came from EMEA, while net profit rose 17 per cent to $18.3m. For the whole first half of the year, turnover increased 11 per cent to $310.7m, while net profit was up 30 per cent to $32.2m.