May 28th, 2015 by Adam Armstrong
Avago Enters Definitive Agreement to Acquire Broadcom For $37 Billion
Today Avago Technologies and Broadcom Corporation announced that they have entered a definitive agreement for Avago to acquire Broadcom. The deal will be carried out in cash and stock transactions that value the combined companies at $77 billion. Once combined, the new company will have the most diversified communications platform in the semiconductor industry, and the new company will have a combined revenue of $15 billion.
Avago has a good track record of acquiring companies and adding them to its platform, such as Emulex and LSI. Combining the products and technology of the two companies will bring future opportunities for Avago potentially making it the leader in communications semiconductors. Hock Tan, the CEO of Avago, will become the CEO of the combined company, while Dr. Henry Samueli, CTO of Broadcom, will become the CTO of the new combined company. The company will adopt the name Broadcom Limited.
Avago will acquire Broadcom for $17 billion in cash consideration and the economic equivalent of approximately 140 million Avago ordinary shares, valued at $20 billion as of May 27, 2015, resulting in Broadcom shareholders owning approximately 32% of the combined company. The boards of directors of both companies have unanimously approved the transaction. Closing is expected by the end of the first calendar quarter in 2016.