In a new turn of events, what will soon be referred to as the largest merger is to take place for a cost of $37 billion. The merger is between Avago Technologies Ltd (AVGO.O) and Broadcom Corp (BRCM.O) whereby the latter is being purchased by Avago Technologies Ltd (NASDAQ:AVGO).
The two are well-known chipmakers that got into a cash-and-stock deal that will see each of its shares rise to 23% and 10% for Broadcom Corp (NASDAQ:BRCM) and Avago respectively. Avago attends to the wireless and industrial markets while Broadcom deals with chips connectivity a product that is in constant use on Smartphones.
Avago Chief Executive Hock Tan is said to be behind the brokerage of the deal that will make a previously lesser known company to become one of the leading industry players. He has been at the helm of Avago for the last nine years directing all his efforts into the Company’s development up to what it is today; a $36 billion company worth of acquisitions.
According to Tan to whom a strong track record of success has been tagged, the newly formed enterprise will enhance a globally diversified leadership in wired and wireless communication semiconductors.
Currently, a lot of partnerships are taking place within the industry. This has been brought about by the growing demand of cheaper chips and new products to power Internet-connected devices. At the moment, the latest merge whose Company shall be situated in Singapore is the industry’s second megadeal this year.
However, even with the growing demand, analysts say that this is likely to be the last one of its kind. Earlier on Avago Technologies Ltd (NASDAQ:AVGO) had bought another chipmaker LSI Corp for $6.6 billion.
From the current unfolding, it seems like Tan has been on a strategic move to win potential targets. Nevertheless, the deal did not come quickly and Avago’s investor, Private equity firm Silver Lake Partners played a role in evaluating and structuring out the deal.