Broadcom Corp. today announced a definitive merger agreement with NetLogic Microsystems. The deal, which is valued at $3.7 billion, gives the two communications semiconductor leaders a stronger position for moving into wireless and other advanced infrastructures. NetLogic Microsystems shareholders will receive $50 per share, a price that is over 50 percent more than the price for NetLogic shares at close of trading Friday.
The transaction has been approved by the Broadcom and NetLogic Microsystems boards of directors, although approval by NetLogic Microsystems’ stockholders is pending. It also is subject to customary closing conditions. Both companies expect the deal to complete early in 2012. NetLogic shares soared by about 50 percent on the news in early trading. Click here for the latest price information on NetLogic, and here for Broadcom.
“This transaction delivers on all fronts for Broadcom’s shareholders — strategic fit, leading-edge technology and significant financial upside,” said Scott McGregor, Broadcom’s president and CEO. “Broadcom is now better positioned to meet growing customer demand for integrated, end-to-end communications and processing platforms for network infrastructure.”
He added that with NetLogic Microsystems, Broadcom is acquiring a multi-core embedded processor solution, knowledge-based processors, and digital front-end technology for wireless base stations that are key enablers for the next generation infrastructure build-out. This will enable Broadcom to deliver seamlessly integrated network infrastructure platforms to its customers, McGregor said, reducing both time-to-market and development costs.
“This is a strong win for customers, for shareholders and for NetLogic Microsystems employees,” said Ron Jankov, NetLogic Microsystems president and CEO. “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.”
In unrelated – and overshadowed – news, cloud computing company Ubitus Inc. announced a partnership with Broadcom to extend its GameCloud platform support to Broadcom’s set-top box (STB) product family. GameCloud technology can stream HD-quality gaming with minimum bandwidth requirements and an integrated dynamic user interface.
Wesley Kuo, CEO of Ubitus, said Broadcom was its best partner choice due to its advanced STB functionality and high performance CPU for accelerated game control performance and fast response times, low latency decode architecture and innovative network offload engines.
“The enablement of Ubitus GameCloud platform on a STB allows the capability to deliver any type of gaming experience on TV, including 3D intensive first-person shooting games, social games, and online games,” Kuo said. “This is great news to the operators because now premium game content can be available in the living room via a set-top box.”
Broadcom today also reiterated its business outlook for the third quarter of 2011. Broadcom expects revenue around the middle of the previously-guided range of $1.9 billion and $2.0 billion, GAAP product gross margins of flat to up slightly and GAAP research & development and selling, general and administrative expenses of flat to down $10 million in the third quarter of 2011. 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.