Broadcom will acquire NetLogic Microsystems
for $3.7 billion. The transaction is expected to close in the first half of
2012. Under the agreement, NetLogic Microsystems shareholders will receive $50
per share in a transaction of approximately $3.7 billion, net of cash assumed.
The acquisition extends Broadcom’s infrastructure
portfolio with a number of critical new product lines and technologies,
including knowledge-based processors, multi-core embedded processors, and
digital front-end processors, each of which offers industry-leading performance
and capabilities. The combination enables Broadcom to deliver
seamlessly-integrated network infrastructure platforms to its customers,
reducing both their time-to-market and their development costs.
Today’s transaction is consistent with Broadcom’s
strategic portfolio review process and with our focus on value creation through
disciplined capital allocation while delivering best-in-class platforms for
customers in the fastest growing segments of the communications industry.
Broadcom is now better positioned to meet growing customer demand for
integrated, end-to-end communications and processing platforms for network
infrastructure,” said Scott McGregor, president and CEO of Broadcom.
Our industry-leading product portfolio will benefit from
access to Broadcom’s broad set of leading-edge technologies, tools, resources
and eco-system, which will enable the combined company to offer a complete and
integrated platform for our customers’ next generation designs. Our employees
will benefit from the strong cultural alignment with Broadcom, and from joining
forces with an equally aggressive and energetic organization with the same
relentless focus on engineering excellence and innovation,” said Ron Jankov,
president and CEO.
In October 2010, Broadcom acquired Beceem –
a leader in 4G WiMAX and LTE chipsets. However, last month the company said in
an interview that it was no longer confident about WiMax in the US, as it
appears that more companies are in favour of LTE in that part of the world.
This came after the announcement that Sprint – which has
a WiMax partner in Clearwire, had signed a 15-year agreement with Lightsquared
to share network infrastructure and possibly avail of its LTE network. Broadcom
now supports the IEEE standard 802.11af, or wide area Wi-Fi network. 802.11af
with its long coverage range makes for cheaper BTS infrastructure than WiMax,
although the bandwidth is lower.
Broadcom is looking at revenues of between $1.9 billion
and $2.0 billion in Q3 2011. It expects the deal to add 10 cents per share to
its non-GAAP earnings in 2012. By the end of the third quarter, Broadcom also
expects to have approximately $4.2 billion in cash and cash equivalents on
hand, up from approximately $3.8 billion at the end of the second quarter.
In Q2, Broadcom reported revenues of $1.8 billion, an increase of 12.5 percent y-o-y, and a
strong third quarter was predicted at that time as well. The latest acquisition
will no doubt further boost Broadcom’s revenues in the coming quarter. NetLogic Microsystems
reported revenues of $103.7 million, a 5.1 percent sequential increase from
$98.7 million for the first quarter of 2011 and a 9.1 percent percent increase
from $95.0 million for the second quarter of 2010. It reported a GAAP Net Loss
of $35.2 million for Q2.
By Beryl M