BUSINESS

Chip maker Broadcom to acquire NetLogic for $50 per share in deal to expand its product line

09/12/2011 07:56 EDT | Updated 11/12/2011 05:12 EST
NEW YORK, N.Y. - Broadcom Corp. said Monday it has agreed to acquire NetLogic Microsystems Inc. for about $3.7 billion in cash.

Broadcom designs chips that are used in products ranging from cable boxes to cellphones. It says NetLogic will extend its product line with a number of new processors.

The purchase price works out to $50 per share, a 57 per cent premium to NetLogic's closing price of $31.91 on Friday.

Shares of Netlogic, based in Santa Clara, Calif., climbed 51 per cent to $48.04 in premarket trading Monday.

The transaction has been approved by both companies' boards. It still needs regulatory clearance in the U.S., Taiwan and China, but it is expected to close in the first half of next year.

Broadcom expects the acquisition to boost earnings by about 10 cents per share next year.

Broadcom based in Irvine, Calif., also said it expects third-quarter revenue to fall in the middle of a previously announced range of $1.9 billion to $2.0 billion. Analysts polled by FactSet expect $1.95 billion.