Broadcom to Buy SiByte in $2 Billion Deal
By Ian Simpson
NEW YORK (Reuters) - High-speed communications semiconductor maker Broadcom Corp. (NasdaqNM:BRCM - news) said on Monday that it would buy start-up processor chip maker SiByte Inc. in a deal worth up to $2.07 billion in stock.
The purchase of privately held SiByte is the most recent in a wave of acquisitions for Broadcom. The Irvine, Calif., company wants to be a one-stop source for networking equipment and semiconductors.
SiByte, based in Santa Clara, Calif., makes chips for networking and communications applications that require relatively low energy of 2.5 watts. Such efficient semiconductors are in strong demand because of the surge in telecommunications and data transmission over the Internet.
``The acquisition of SiByte ... significantly expands Broadcom's product portfolio for Internet infrastructure equipment,'' Broadcom President and Chief Executive Henry Nicholas III said in a statement.
Broadcom said it would issue up to 9.3 million shares of common stock for SiByte. At Friday's closing price of $222-3/8 for the stock, the deal is worth about $2.07 billion.
About 5.6 million shares will be issued at closing of the deal, expected in about 60 days. Another 3.7 million will be reserved for SiByte stockholders and optionholders when some performance goals are met.
Broadcom's shares were up at $223 in pre-opening trading on the Instinet electronic broker system.
Broadcom said it had signed a definitive agreement to buy SiByte. The companies' boards have approved the deal.
Broadcom said it would post an unspecified one-time charge in its fiscal fourth quarter for research and development expenses related to the SiByte purchase.
SiByte was founded by Dan Dobberpuhl, who had been one of the key engineers behind Compaq Computer Corp.'s (NYSE:CPQ - news) Alpha microprocessor program.
Dobberpuhl, SiByte's president and chief executive, will join Broadcom's senior management. Data networking company Cisco Systems Inc. (NasdaqNM:CSCO - news) was an early investor in SiByte.
SiByte has about 120 employees, almost all with engineering backgrounds |
