Avago Technologies Limited and Broadcom Corporation today announced that they have entered into an agreement under which Avago will acquire Broadcom in a cash and stock transaction that values the combined company at $77 billion. Upon completion of the acquisition, the combined company is expecting to generate combined annual revenues of approximately $15 billion.
Broadcom product lines include processors for Ethernet and wireless LANs, cable modems, servers, home networking devices, and cellular phones. Major customers of Broadcom include Apple, Hewlett-Packard, Motorola, IBM, Dell, Asus, Lenovo, Linksys, Logitech, Nintendo, Nokia Siemens Networks, Nortel(Avaya), TiVo, Tenda, and Cisco Systems. Avago’s technologies include fiber optic, LED, LSI, motion control encoders, optical sensors, radio frequency and microwave controllers. Avago Technologies also manufactures enterprise storage chips and PCIe switching and bridge chips.
Under the terms of the definitive agreement, 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 percent of the combined company. Based on Avago’s closing share price as of May 27, the implied value of the total transaction consideration for Broadcom is $37 billion.
The transaction has been unanimously approved by the boards of directors of both companies, as well as a special committee of the independent directors of Broadcom. The founders of Broadcom have signed support agreements to vote to approve the transaction. Closing of the transaction is expected by the end of the first calendar quarter of 2016, and is subject to regulatory approvals in various jurisdictions, as well as the approval of Avago’s and Broadcom’s shareholders.
Following completion of the transaction, Hock Tan, President and Chief Executive Officer of Avago, will continue to serve as President and Chief Executive Officer of the combined company, which will adopt the name Broadcom Limited. Dr. Henry Samueli, co-founder of Broadcom, will join the board of the combined company as will another director from Broadcom. In addition, Dr. Samueli will be appointed Chief Technology Officer of the combined company. The other co-founder of Broadcom, Dr. Henry T. Nicholas, will serve in a strategic advisory role within the combined company, reporting to Tan.
