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Avago, Broadcom To Combine In $37 Billion Deal

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Avago, Broadcom To Combine In $37 Billion Deal

Avago Technologies Ltd (NASDAQ: AVGO) announced on Thursday it has entered into a definitive agreement to acquire Broadcom Corporation (NASDAQ: BRCM) for approximately $37 billion.

As part of the deal, 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. As a result of the transaction, Broadcom shareholders will own approximately 32 percent of the company.

Upon completion of the transaction, the combined company would have an enterprise value of $77 billion and create a company with combined annual revenues of approximately $15 billion and create $750 million of projected annual cost synergies within 18 months.

Related Link: PacCrest: Broadcom A 'Strategic Fit' For Avago

The transaction has been unanimously approved by the boards of directors of both companies. Closing of the transaction is expected to occur by the end of the first quarter 2016 and remains subject to regulatory approvals in various jurisdictions in addition to the approval of Avago's and Broadcom's shareholders.

"Today's announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago's heritage of technology from HP, AT&T, and LSI Logic, in a landmark transaction for the semiconductor industry," said Hock Tan, President and Chief Executive Officer of Avago in a press release. "The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform. Together with Broadcom, we intend to bring the combined company to a level of profitability consistent with Avago's long-term target model."

"This transaction benefits all of Broadcom's key stakeholders," remarked Scott McGregor, President and Chief Executive Officer of Broadcom. "Our customers will gain access to a greater breadth of technology and product capability. For our shareholders, the transaction provides both compelling up-front value as well as the opportunity to participate in the future upside of the combined business."

Posted-In: Hock Tan Scott McGregorNews M&A Best of Benzinga

 

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