Avago to acquire Broadcom for $37 billion

Avago to acquire Broadcom for $37 billion

Avago Technologies is to acquire chipmaker Broadcom for $37 billion.

Under the terms of the deal, Avago will pay $17 billion in cash and 140 million in shares, valued at $20 billion. The Singapore-based company will fund the cash consideration with cash on hand from the combined entity and $9 billion in financing from a bank consortium.

Shareholders of Broadcom will own approximately 32% of the combined company. In addition, they will have the option to elect for cash, shares or a combination of the two.

The acquisition of Broadcom - a provider of technologies such as ethernet and Wifi  - will create the world’s sixth-largest chipmaker, with annual revenues of $15 billion and a complete set of products for fixed and mobile communication industries.

“Today’s announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago’s heritage of technology from HP, AT&T, and LSI Logic, in a landmark transaction for the semiconductor industry,” said Hock Tan, president and CEO of Avago. 

“The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform.”

The deal is expected to be completed by the first quarter of 2016, subject to regulatory and shareholder approvals. 

In February 2015 Avago announced that it will acquire networking company Emulex in a deal valued at $606 million.