Avago’s Epic $37 Billion Broadcom Acquisition Is Largest Ever Tech Deal

There are mergers, and then there are mega-mergers, such as the one that Avago Technologies and Broadcom just agreed to. The two chip makers have entered into a definitive agreement for Avago to acquire Broadcom for $37 billion as part of cash and stock deal, making it the largest transaction in the tech industry to date.

Under terms of the agreement, Avago will pay Broadcom shareholders $17 billion in cash, giving them a 32 percent stake in the new company. The other $20 billion will be paid in stock. At that price, the two companies combined will have an enterprise value of $77 billion. They can also claim the most diversified communications platform in the semiconductor industry on combined annual revenues of around $15 billion.


"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, President and Chief Executive Officer of Avago. "The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform. Together with Broadcom, we intend to bring the combined company to a level of profitability consistent with Avago's long-term target model."

The new company will be known as Broadcom Limited. Tan will continue to serve as President and CEO of what will be the third largest semiconductor in the U.S. by revenue, trailing only Qualcomm (No. 2) and Intel (No. 1).

Avago isn't new to big transactions, though this one is by far the largest. A year ago this month, Avago acquired LSI Corporation for $6.6 billion in an all-cash transaction. Acquiring companies has been part of Avago's strategy for growth ever since Tan stepped into the role of CEO almost a decade ago.

Broadcom appears to be in good hands with Tan running the show. His resume includes successful stints in various roles at Integrated Device Technology, Integrated Circuit Systems, Commodore International, Pepsi, and General Motors.