Leading chipmaker Broadcom Corporation (BRCM) announced that it will acquire privately held Beceem Communications Inc. for $316 million. The acquisition has been approved by the boards of directors of both companies.
The transaction is expected to close by the fourth quarter of 2010 or the end of the first quarter of 2011. Excluding any purchase accounting related adjustments and fair value measurements, Broadcom expects the acquisition of Beceem to be neutral to bottom-line in 2011.
Beceem is a leading provider of 4G semiconductors and offers a number of single-chip solutions optimized for mobile devices and wireless broadband markets. Fueled by the broadband communications explosion, Broadcom has enjoyed robust growth since its inception.
Broadcom had been interested in expanding in the wireless market, primarily in the 2G and 3G spaces. The acquisition of Beceem will certainly accelerate Broadcom’s time-to-market in 4G. The combination of Broadcom’s 3G/2G cellular solutions, wireless LAN, Bluetooth, GPS, Ethernet switching and other associated IP with Beceem’s 4G technology will provide customers access to a wide portfolio of broadband devices.
To meet the growing demand for bandwidth and content, service providers around the world are rolling out next-generation 4G networks. Beceem’s solutions address both LTE and WiMAX, the two standards associated with 4G cellular services. The 4G multimode platform by Beceem support both LTE and WiMAX 4G networks. This technology can support broadband download speed of high density, thereby enabling mobile broadband connectivity for smartphones, mobile computing, consumer electronics products and wireless gateways.
We view this acquisition as positive. Along with strengthening its product portfolio, the acquisition will also make good use of the solid cash balance of $2.0 billion that Broadcom possessed at the end of the second quarter.
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