Broadcom Corp. (Nasdaq: BRCM) said Tuesday it will buy Innovent Systems, a maker of radio frequency (RF) integrated circuits for short-range wireless data communications, for about $440 million in stock.
Shares in the provider of integrated circuits for broadband communications closed at 146 11/16, Monday, having declined from their 52-week high of 253 despite the company's first quarter performance.
Innovent's recently announced family of Bluetooth transceivers and systems, known as Blutonium, will add to Broadcom's offering in the wireless space, specifically the short-range market which analysts estimate will be a multi-billion dollar industry in the next few years.
Innovent's chips are based on the emerging Bluetooth standard that lets devices such as cellphones and PCs communicate. Its Blutonium product line targets Bluetooth applications in Personal Area Networks (PANs) and wireless Local Area Networks (LANs), including home networks. The standard has been driven by European mobile phone powerhouses Ericsson (Nasdaq: ERICY) and Nokia (NYSE: NOK) as well as U.S. companies such as Intel Corp.(Nasdaq: INTC).
Motorola (NYSE: MOT) also inked a deal yesterday, with IBM (NYSE: IBM) and Toshiba to offer Bluetooth technology across their product lines.
Broadcom has had close ties with the company from Innovent's inception in 1999, and already owned about 13 percent of the company.
Broadcom will issue around 3 million shares of its Class A stock in exchange for all outstanding shares of Innovent. At Broadcom's Monday closing price, the deal is worth about $440 million. The merger is expected to close within 60.
In connection with the transaction, Broadcom expects to record a one-time write-off for purchased in-process research and development expenses in its third fiscal quarter.