Broadcom said it will buy wireless infrastructure chipmaker NetLogic Microsystems for $3.7 billion in a bid to bolster its position in the wireless market and deliver end-to-end networking and processing platforms to customers as data demands grow.
Broadcom said it will pay $50 per share for NetLogic, which represents a 57 percent premium of NetLogic's closing price on Friday. Broadcom said the acquisition will give it access to a wider processing portfolio, including knowledge-based processors, multi-core embedded processors, and digital front-end processors. Broadcom said the deal will allow its customers to reduce time-to-market as well as development costs. The deal is subject to regulatory approval and the companies expect it to close in the first half of 2012.
NetLogic, which has increased its sales for at least eight consecutive quarters, makes advanced chips that are embedded into wireless base station architecture as well routers and other network elements. NetLogic's customers include Alcatel Lucent (NASDAQ:ALU), Cisco Systems, Huawei and ZTE, and the company also specializes in chipsets for LTE base stations.
The deal is Broadcom's largest acquisition to date and its latest attempt to catch up with larger rival Qualcomm (NASDAQ:QCOM). Broadcom said the deal will more than double its addressable market for network infrastructure.
"This greatly expands our market opportunities in the networking space," Broadcom CEO Scott McGregor told the New York Times. "We'll be the only company that provides complete end-to-end solutions in networking."
Broadcom, which bought WiMAX/LTE chipmaker Beceem last year for $316 million in a bid to get a leg up in the 4G market, recently acknowledged that WiMAX's position in the U.S. market is fading fast.
- see this release
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this NYT article
- see this Barron's article
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