Broadcom said today it has agreed to buy NetLogic Microsystems for $3.7 billion as part of a move to consolidate its presence in the communications chip market.
The deal shows that the communications chip market is still a high stakes battle, as Broadcom tries to fight with a variety of rivals from Intel to Qualcomm.
Under the deal, Santa Clara, Calif.-based NetLogic shareholders will get $50 per share. Irvine, Calif.-based Broadcom will pick up new product lines such as knowledge-based processors, multi-core embedded processors, and digital front-end processors.
The deal has been approved by the boards of both companies and is expected to close in the first half of 2012, subject to the usual closing conditions.
NetLogic’s share price was $31.91 on Friday, so the deal is a significant premium above the current valuation. NetLogic’s shares are up more than 50 percent this morning. Broadcom said the deal will add 10 cents a share to non-GAAP earnings in 2012, and Broadcom reaffirmed its revenue target for the third quarter at $1.9 billion to $2 billion.