Avago Technologies and Broadcom announced that they have entered into a definitive agreement under which Avago will acquire Broadcom for $17 billion in cash and $20 billion worth of Avago shares. Post acquisition, the combined company will be based in Avago’s home, Singapore and will continue to be called Broadcom. The combined firm will have a market value of $77 billion and revenue of $15 billion. Closing of the transaction is expected by the end of the first quarter of 2016.
After the completion of the transaction, Hock Tan, President and Chief Executive Officer of Avago, will continue to serve as the President and Chief Executive Officer of the combined company. Dr. Henry Samueli, Co-Founder, Chief Technical Officer and Chairman of the Board of Broadcom, will be appointed Chief Technology Officer of the combined company. Dr. Henry T. Nicholas, Co-Founder and past CEO of Broadcom will serve in a strategic advisory role within the combined company, reporting to Tan.
Avago is a semiconductor company that produces a number of different products including PCle switches for motherboards. Avago’s product portfolio includes thousands of products in four primary target markets: wireless communications, enterprise storage, wired infrastructure and industrial and other.
Broadcom provides semiconductor solutions for wired and wireless communications. It makes different chips for WiFi and GNSS. The company also produces many of the chips used in networking equipments for data centres. The California-based company’s customers include Apple, Hewlett-Packard, Motorola, IBM, Dell, Asus, Lenovo, Linksys, Logitech,Nintendo, Nokia Siemens Networks, Nortel(Avaya), TiVo, Tenda, and Cisco Systems.
This deal could be a significant move in competing with Intel and Qualcomm in the areas of wired and wireless networking. In April 2014, Intel Corp. had entered into a strategic collaboration with CA based enterprise data management firm, Cloudera to enhance both Intel data center and Internet of Things (IoT) technology initiatives. Other significant investments of Intel included acquisition of Spanish startup Indisys to make its move in artificial intelligence, and wireless assets of Mindspeed Technologies. In terms of Qualcomm, it acquired chipmaker CSR PLC in a $2.5 billion (Rs 15,000 crore) deal in October 2014.Category Business Technology