Avago Technologies announces deal to buy Broadcom for $37 billion
NEW YORK — Avago Technologies, which employs about 1,300 people in Fort Collins, is buying rival chipmaker Broadcom in a cash and stock deal worth about $37 billion.
The deal, announced Thursday, comes at a time when technology stocks are booming and the companies that make the guts for tablets and smartphones are looking for ways to grow aggressively.
Avago says the deal will give it the most diversified communications platform in the chip industry. The combined company will be worth $77 billion and is expected to post annual revenue of $15 billion.
Avago will pay $17 billion in cash, along with the equivalent of about 140 million Avago shares, which were worth about $20 billion when the markets closed Wednesday.
Broadcom shareholders will be able to trade each of their current shares for either a cash payment of $54.50, or 0.4378 shares of the new company’s stock. When the deal closes, Broadcom shareholders will own about 32 percent of the combined company.
Broadcom Corp.’s chips are used in smartphones, tablets and other devices. In July the company said it would shut down is baseband unit, which made chips that control communication functions in mobile devices. The Irvine, California-based company eliminated about 2,500 jobs in the process, saying it wanted to focus on the broadband, connectivity and infrastructure markets.
It’s the latest and largest in a series of deals for Avago. A year ago Avago Technologies Ltd. brought LSI Corp. for $6.6 billion. The move was intended to strengthen Avago’s position in the enterprise storage market and broaden its offerings. It later sold LSI’s networking business to Intel Corp. for $650 million. Earlier this month Avago bought data and networking equipment maker Emulex for $606 million.
Avago, which is based in both Singapore and San Jose, California, reported $4.27 billion in revenue in its latest fiscal year, which ended in November. Broadcom had $8.43 billion in revenue in 2014.
Avago’s shares have more than doubled over the last 12 months and they reached an all-time high of $144.82 on Wednesday. Broadcom shares are up 89 percent in the last year.
Avago says it plans to fund the cash portion of the deal with a combination of cash and $9 billion in new debt. The deal, which has been approved by the boards of both companies, is expected to close in the first calendar quarter of 2016.
NEW YORK — Avago Technologies, which employs about 1,300 people in Fort Collins, is buying rival chipmaker Broadcom in a cash and stock deal worth about $37 billion.
The deal, announced Thursday, comes at a time when technology stocks are booming and the companies that make the guts for tablets and smartphones are looking for ways to grow aggressively.
Avago says the deal will give it the most diversified communications platform in the chip industry. The combined company will be worth $77 billion and is expected to post annual revenue of $15 billion.
Avago will pay $17 billion in cash, along with the…
Start your subscription to BizWest, The Business Journal of the Boulder Valley and Northern Colorado, TODAY!
Online access PLUS print versions of all Bizwest publications
One month subscription includes:
- 1-month online access to BizWest.com which includes unlimited news stories, archived story access and interactive versions of monthly business journal.
- 1-month subscription to BizWest & all of the publications in print version.
- 1-year access to daily email newsletter & breaking news alerts.
Online access for one year.
One month subscription includes:
- 1-month online access to BizWest.com which includes unlimited news stories, archived story access and interactive versions of monthly business journal.
- 1-year access to daily email newsletter & breaking news alerts.
Online and print versions of all Bizwest publications PLUS premium access to BizWest Datastore for one year.
One year subscription includes:
- 1-year online access to BizWest.com which includes unlimited news stories, archived story access and interactive versions of monthly business journal.
- 1-year subscription to BizWest & all of the publications in print version.
- 1-year premium online access to unlimited downloads from the BizWest Datastore!
- 1-year premium online access to the Breaking Ground website!
- 1-year access to daily email newsletter & breaking news alerts.
Premium access to the BreakingGround site plus online and print versions of all BizWest publications.
One year subscription includes:
- 1-year online access to BizWest.com which includes unlimited news stories, archived story access and interactive versions of monthly business journal.
- 1-year subscription to BizWest & all of the publications in print version.
- 1-year premium online access to the Breaking Ground website!
- 1-year access to daily email newsletter & breaking news alerts.
Premium access to the BreakingGround site plus online and print versions of all BizWest publications.
One month subscription includes:
- 1-year premium online access to the Breaking Ground website!
- 1-month online access to BizWest.com which includes unlimited news stories, archived story access and interactive versions of monthly business journal.
- 1-month subscription to BizWest & all of the publications in print version.
- 1-year access to daily email newsletter & breaking news alerts.