US chipmaker Broadcom said on Monday it would acquire California rival NetLogic Microsystems in a US$3.7 billion all-cash deal as it extends its footprint in network communications processors.
Broadcom will pay US$50 a share for NetLogic, a 57 percent premium over the firm’s closing price on Friday of US$31.91, under the terms of the merger agreement, Broadcom said in a statement.
The deal has been approved by the two companies’ boards of directors, and is subject to shareholder and regulatory approval, Broadcom said.
The merger is expected to close in the first half of next year.
“This transaction delivers on all fronts for Broadcom’s shareholders — strategic fit, leading-edge technology and significant financial upside,” Broadcom president and chief executive Scott McGregor said in the statement.
“With NetLogic Microsystems, Broadcom is acquiring a leading multi-core embedded processor solution, market-leading -knowledge-based processors and unique digital front-end technology for wireless base stations that are key enablers for the next generation infrastructure build-out,” he added.
The Irvine, California-based Broadcom also confirmed its third-quarter outlook of US$1.9 billion to US$2 billion in revenue, and said it expected to have a cash pile of US$4.2 billion by quarter’s end, compared with US$3.8 billion at the end of the second quarter.
NetLogic, headquartered in Santa Clara, reported a second-quarter loss of US$35.2 million in July, despite revenue gains of more than 9 percent, to US$103.7 million.
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