The European Commission has recently approved the $37-billion acquisition of Broadcom by Avago, noting that this takeover would not damage effective competition in this crucial high technology sector.
Singapore-based chipmaker Avago Technologies Limited will pay $17 billion in cash and $20 billion in its own shares for its American rival, Broadcom Corp. After the merger is completed, Broadcom shareholders will own about 32% of the combined corporation.
This acquisition will create the sixth-largest semiconductor manufacturer in the world as the merged entity will have $15 billion in annual revenue.
Avago was established in 1961 as a semiconductor products division of Hewlett-Packard. Later in 2000, the company became independent. Avago specializes in the development of radio-frequency components for wireless networks and corporate servers.
Broadcom is the world’s largest producer of Wi-Fi chipsets for mobile devices. In 2014, Broadcom had a market capitalization of $32.6 billion while the total capitalized value of Avago was estimated at about $34.9 billion dollars. Nevertheless, Broadcom managed to outperform its competitor in terms of revenue as it made $8.4 billion in sales last year, compared with its acquirer’s $4.9 billion revenue.