Latest Tech News - Broadcom acquires NetLogic for $3.7 billion

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Broadcom hopes to extend its processor portfolio by acquiring NetLogic.

(Credit:Broadcom)
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. Both companies compete in the semiconductor market, but NetLogic is offering components in areas that Broadcom needs to bolster its own offerings, including knowledge-based processors and multi-core embedded processors.

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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, on the other hand, 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 in the 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.

For its part, 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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