Avago Technologies has brokered a US$37 billion cash-and-stock deal to acquire rival chip maker Broadcom.
Under the terms of the agreement, Avago will pay $17 billion in cash, plus $20 billion worth of ordinary shares, leaving Broadcom shareholders with a stake of around 32% in the combined entity.
That entity will operate under the Broadcom brand.
It will have an enterprise value of $ 77 billion, the firms said, and generate annual revenues of around $15 billion.
The pair expect the deal to close by the end of the first quarter of 2016, subject to shareholder and regulatory approvals. Broadcom founders Henry Nicholas and Henry Samueli have already committed to voting in favour of the takeover.
"Today’s announcement marks the combination of the unparalleled engineering prowess of Broadcom with Avago’s heritage of technology from HP, AT&T, and LSI Logic, in a landmark transaction for the semiconductor industry," said Hock Tan, CEO of Avago.
"The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors," he added.
Tan will serve as president and chief executive of the merged company. Samueli, who serves as chairman and chief technology officer of Broadcom, will continue in the CTO role and take a seat on the board.
Nicholas will carry out a strategic advisory role, reporting to Tan.
