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Business

High-tech firm Avago acquires rival Broadcom

Singapore-based chipmaker Avago Technologies has announced it is buying US company Broadcom in a multibillion-dollar deal aimed at creating a global mobile chipmaking powerhouse.

The cash-and-stock deal, worth about $37 billion (33.9 billion euros), was announced Thursday. Avago says the acquisition will give it the most diversified communications platform in the chip industry.

The deal "creates the world's leading diversified communications semiconductor company," read a statement from the companies.

The combined firm would have a market value of $77 billion and revenue of $15 billion, it added. It would be a key player in components in the surging market for mobile devices like smartphones and tablets.

The deal, which includes $17 billion in cash and $20 billion in stock, has been approved by the boards of both companies, and is expected to close early 2016. Following the transaction, Broadcom shareholders will own about 32 percent of the combined company.

'A landmark transaction'

Avago's decision to buy Broadcom 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.

"Today's announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago's heritage of technology... in a landmark transaction for the semiconductor industry," said Avago Chief Executive Hock Tan.

"The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors."

Avago was originally a semiconductor unit of US-based Hewlett-Packard. It has operations in California as well as its Singapore home base.

sri/hg (AFP, AP)