Orange County Business Journal

Broadcom Closes $3.7B NetLogic Deal

Chris Casacchia Friday, February 17, 2012

Irvine-based chipmaker Broadcom Corp. on Friday said it closed its $3.7 billion buy of NetLogic Microsystems Inc. in Santa Clara.

It’s Broadcom’s most expensive acquisition to date and one of the priciest among chipmakers in recent years.

The buy extends the company’s reach in fourth-generation wireless networks, or 4G, as well as processors.

Both are key growth segments, according to Broadcom Chief Executive Scott McGregor.

“The NetLogic acquisition is a significant milestone in Broadcom’s strategy to extend its communications infrastructure leadership and take advantage of the explosive growth in mobile and video traffic and the rise of cloud computing,” he said. “This acquisition adds a high-margin, high-growth business that strongly increases the addressable market of our infrastructure and networking business.”

Broadcom sells chips to many of the same network equipment makers that use NetLogic products.

Broadcom chips help direct traffic across networks while NetLogic chips examine the type of data on the network, boosting processing speed and efficiency.

Broadcom will add more than 700 employees with the acquisition.

Ron Jankov, former chief executive of NetLogic, will hold the title of senior vice president and general manager, reporting to Rajiv Ramaswami, executive vice president and general manager of Broadcom’s Infrastructure Networking Group.

Investors looked past the news of the deal and sent Broadcom shares down 1% in afternoon New York trading to a market value of about $20.5 billion.