Avago to buy Broadcom for $37 bn in biggest ever chip deal

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Avago Technologies Ltd agreed to buy Broadcom Corp for $37 billion in the largest merger of chipmakers ever, turning a lesser known company run by a ferocious dealmaker into one of the biggest industry players.

Avago, which serves the wireless and industrial markets, is offering Broadcom shareholders $17 billion in cash and Avago shares valued at $20 billion.

Broadcom is best known for its connectivity chips, which are used widely in smartphones made by Apple Inc and Samsung Electronics Co Ltd .

The deal is the biggest so far by Avago Chief Executive Hock Tan, who has developed a small chipmaker into a $36 billion company through acquisitions since taking the helm nine years ago.

Tan, a serial deal-maker, has trimmed Avago’s portfolio by divesting units while bulking up in faster-growing areas.

The combined company, to be based in Singapore and known as Broadcom, will be the third-largest U.S. semiconductor maker by revenue, behind Intel Corp and Qualcomm Inc . The merger is the industry’s second megadeal this year and is unlikely to be the last, analysts said.

The $37 billion price represents a premium of about 28 percent over Broadcom’s market value of $28.85 billion as of Tuesday’s close, before the Wall Street Journal reported that the companies were in talks.

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