Leading chipmaker Broadcom Corporation (BRCM) will acquire privately-held Gigle Networks Inc. for $75 million.
The acquisition is expected to be completed in the fourth quarter of 2010. Broadcom will pay an additional $8 million to the former holders of Gigle Networks capital stock, if Gigle achieves certain performance goals. Broadcom expects the acquisition of Gigle Networks to be dilutive by approximately one cent per share in 2011.
Gigle Networks develops system-on-a-chip (SoC) solutions for home networking over power lines.
Broadcom expects that Gigle Networks’ technology will widen its product portfolio. The acquisition will also enable Broadcom to design more highly integrated SoCs, which allow whole-home network coverage in a wide variety of global deployment scenarios.
With the addition of Gigle Networks’ powerline technology to Broadcom’s technology portfolio, the company will be able to provide additional functionality to its customers in broadband home segments including set-top box, broadband carrier access and wireless router.
Powerline networking uses existing electrical wiring to create an in-home network, enabling a cost-effective and efficient method to connect multiple devices and distribute digital content throughout the home.
Last week, Broadcom completed the acquisition of privately-held Percello Ltd. for $86 million. Broadcom reserved an additional consideration for future payment upon satisfaction of certain performance goals. The acquisition is expected to be approximately neutral to earnings per share in 2011.
Percello develops system-on-a-chip (SoC) solutions for femtocells. Femtocells are low-power wireless access points that operate in licensed spectrum to connect standard mobile devices to a mobile operator’s network using residential DSL or cable broadband connections. A femtocell allows service providers to extend service coverage indoors, especially where access would otherwise be limited or unavailable.
Broadcom being a billion dollar company, these acquisitions, although relatively small will not only broaden Broadcom’s product portfolio but will also use a bit of the company’s mammoth cash balance. At the end of the third quarter, Broadcom had cash and equivalents of $2.4 billion.
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