Broadcom Corp. (Nasdaq: BRCM), said Monday it will buy ServerWorks Corp., a supplier of system integrated circuits for servers for about $957 million.
Shares in the provider of chips for broadband networking rose 6 percent, or 5 to 92. Broadcom bought another company just last November.
Executives expect the deal to add 2 to 3 cents to Broadcom's diluted earnings per share each quarter throughout 2001 on a pro forma reporting basis. The company sees a one-time charge for the acquisition in Broadcom's first fiscal quarter, ending March 31.
The deal calls for Broadcom to issue about 11 million shares of its common stock in exchange for all outstanding shares of ServerWorks, making the deal worth $957 million based on Broadcom's closing price on January 5.
Up to 9 million extra shares of Broadcom will be reserved for future issuance upon satisfaction of certain performance goals. The transaction is expected to close within 60 days.
ServerWorks' circuits are used with almost every leading manufacturer of servers using Intel (Nasdaq: INTC) architecture, the companies said. The addition of its products to Broadcom's portfolio will allow the company to deploy wire-speed 10 Gigabit per second (Gbps) communications. 10Gbps is anticipated to be the speed at which local area, wide area and storage area networks converge.