LONDON – Communications chip company Broadcom is set to buy NetLogic Microsystems for $3.7 billion net of cash assumed. Under the agreement, shareholders of NetLogic Microsystems Inc. (Santa Clara, Calif.) will receive $50 per share.
Broadcom is a market leading fabless chip company with a foundation built on broadband communications. The acquisition extends Broadcom's portfolio in such areas as knowledge-based processors and multi-core embedded processors.
The transaction has been approved by the Broadcom (Irvine, Calif.) and NetLogic Microsystems boards of directors and is subject to customary closing conditions, including the receipt of domestic and foreign regulatory clearances and the approval of NetLogic Microsystems' stockholders. The transaction is expected to close in the first half of 2012.
"This transaction delivers on all fronts for Broadcom's shareholders - strategic fit, leading-edge technology and significant financial upside," said Scott McGregor, Broadcom's president and CEO, in a statement issued by NetLogic.
"This is a strong win for customers, for shareholders and for NetLogic Microsystems employees," said Ron Jankov, NetLogic Microsystems' president and CEO, in the same statement.
Broadcom said by the end of the third quarter of 2011 it expects to have approximately $4.2 billion in cash and cash equivalents on hand, up from approximately $3.8 billion at the end of the second quarter.
In the last bubble, Broadcom acquired like crazy but they did it by issuing more shares and acquiring their targets with paper (share certificates).
Looks like target investors are looking for cash in this case.
I am not sure there is a big difference between using stock or cash...the stock can be sold on Nasdaq at any time afterall (sure, if you dumpt it in one hour it is going to depress the value of the entity you are selling but if done over time it should be equivalent to cash)...Kris
Kris, I would hang on to cash any day (perhaps a majority in real Canadian $$$!!). Relatively speaking, stocks can melt as we have seen lately!
I too think it is way too much cash. Only time will tell how wise this decision is!
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