Broadcom to acquire NetLogic for $3.7 billion

Broadcom hopes to extend its processor portfolio by acquiring NetLogic.

 

Another blockbuster acquisition has hit the tech industry.

Semiconductor company Broadcom announced today that it has agreed to acquire NetLogic Microsystems for $50 per share, or about $3.7 billion. The $50 per share represents a nearly 57 percent premium on NetLogic’s closing stock price on Friday of $31.91.

NetLogic seems to be a reasonable acquisition for Broadcom, which focuses on chips for networking gear. Both companies compete in the semiconductor market, but NetLogic offers components in areas that Broadcom needs to bolster its own lineup, including knowledge-based processors and multicore embedded processors, the companies said in a joint statement.

However, NetLogic hasn’t been so successful over the last couple years. In 2009, the company lost $47 million on revenue of nearly $175 million. Last year, it posted a loss of $66 million on $382 million in revenue. So far this year, based on two reported quarters, it has lost about $29 million.

Broadcom, by contrast, generated $4.5 billion in revenue and a $65 million profit in 2009. Last year, it grew its profit to $1.08 billion on revenue of $6.8 billion.

Broadcom and NetLogic have become the latest major-acquisition story in the tech industry. Earlier this year, AT&T announced an agreement to acquire T-Mobile USA from Deutsche Telekom for $39 billion. Just last month, Google announced plans to acquire Motorola Mobility for $12.5 billion.

Both boards have approved the deal. Broadcom hopes to complete its acquisition in the first half of 2012, pending regulatory approval.

As of this writing, NetLogic’s shares have skyrocketed in pre-market trading, surging 50.89 percent to $48.15.

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