By Erin McCarthy
Broadcom Corp. (BRCM) said Tuesday that it will sell certain
assets and non-exclusive licenses to QLogic Corp. (QLGC) for $147
million in cash.
Broadcom relies heavily on the handheld-device market, as it
makes chips for about half the world's tablets and smartphones. For
instance, it supplies chips for Apple Inc.'s (AAPL) iPads and
iPhones, as well as for Samsung Electronics Co.'s (SSNHZ,
005930.SE) Galaxy phones.
While Broadcom has sought to expand its share of the
network-processor market, the company has also worked to further
tighten its hold on the mobile-communications space by trying to
keep up with the transition to next-generation technology.
Under the deal, QLogic--a supplier of switches, controller and
other networking products--will acquire certain 10/40/100Gb
Ethernet controller-related assets and non-exclusive licenses to
intellectual property relating primarily to Broadcom's programmable
NetXtreme II Ethernet controller family.
Broadcom, which provides semiconductor solutions for wired and
wireless communications, will also be an application-specific
integrated circuit, or ASIC, supplier to QLogic, as part of a
long-term supply agreement.
QLogic will also license certain Broadcom patents under a
non-exclusive agreement that will cover QLogic's Fibre Channel
products in exchange for a license fee of $62 million.
The deal has been approved by both companies' boards and is
expected to close in the first quarter.
Excluding potential one-time gains related to this asset sale,
Broadcom expects the transaction to be slightly accretive to
earnings per share in 2014, while QLogic said the transaction will
immediately add to revenue and adjusted earnings per share.
Write to Erin McCarthy at erin.mccarthy@wsj.com
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