Irvine-based chipmaker Broadcom Corp. is buying NetLogic Microsystems Inc. in Santa Clara for $3.7 billion, the company announced Monday.
Under the agreement, NetLogic shareholders will receive $50 per share, a premium of about 57% based on the closing price of NetLogic shares Friday on the Nasdaq.
The transaction has been approved by each company’s board of directors and is subject to customary closing conditions.
The deal, expected to close in the first half of 2012, is projected to add 10 cents per share to Broadcom’s earnings in 2012, the company said.
The acquisition is one of the priciest among chipmakers in recent years. It would extend Broadcom’s reach in fourth-generation wireless networks, or 4G, as well as processors. Both are key growth segments, according to Broadcom President and Chief Executive Scott McGregor.
“This transaction delivers on all fronts for Broadcom’s shareholders: strategic fit, leading-edge technology and significant financial upside,” he said. “Broadcom is now better positioned to meet growing customer demand for integrated, end-to-end communications and processing platforms for network infrastructure.”
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 on Monday also reaffirmed its outlook for the third quarter.
The company projects revenue in the previously guided range of $1.9 billion to $2 billion.
Wall Street’s estimates range from $1.83 billion to $1.93 billion.
Gross margins are projected to be flat or up slightly while research and development and operating expenses are projected to be flat or down $10 million in the current quarter.
Broadcom expects to have approximately $4.2 billion in cash on hand in the September quarter, up more than 10% from the second quarter.
Investors sent Broadcom shares down about 2.5% in early afternoon New York trading to a market value of about $17.4 billion.
NetLogic shares skyrocketed more than 50% when trading began Monday morning to a market value of $3.3 billion and have maintained the surge throughout early afternoon trading.
