Semiconductor firm Avago Technologies is to acquire Broadcom Corporation in a deal that is expected to produce one of the largest chip manufacturing companies in the world with a diverse product portfolio.
Avago, which chiefly develops and supplies chips for the telecoms and industrial markets, announced that the Broadcom deal will consist of $17bn in cash and its own shares valued at approximately $20bn.
The transaction is expected to close by the end of March 2016, and is subject to regulatory approval across various jurisdictions, as well as the approval of Avago's and Broadcom's shareholders.
The acquisition has already been approved by the boards of directors of both companies.
Once the purchase goes through, the merged company will trade under the Broadcom name, the two firms have said.
Broadcom is a major manufacturer of chips for wired and wireless communications, but is perhaps most widely known as the employer of Raspberry Pi founder Eben Upton and the manufacturer of the ARM-based processor chips that power the miniature computing device (pictured).
However, the company's chips are used in many other popular devices, including those from Samsung and Apple.
When the merger is complete, the resulting company will have the most diversified communications platform in the semiconductor industry, with combined annual revenues of approximately $15bn, according to Hock Tan, Avago president and chief executive.
"The combination of Avago and Broadcom creates a global, diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform," he said.
"Together with Broadcom, we intend to bring the combined company to a level of profitability consistent with Avago's long-term target model."
Broadcom co-founder and chief technical officer Dr Henry Samueli gave an upbeat assessment of the planned acquisition.
"In Avago, we have found a culture and a management team that embody the best of the philosophies on which Broadcom was founded, together with a fast-paced, no-nonsense, process-driven business culture that we need to take our combined company to the next level," he said.
Reuters said that the deal represents one of the largest mergers of chip companies in history, and that the combined company will be the third largest US semiconductor firm by revenue, behind Intel and Qualcomm.
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