QLogic Acquired Assets of Broadcom for $147 Million in Cash

Broadcom Corporation and QLogic Corporation announced a definitive agreement under which QLogic will acquire certain 10/40/100GbE controller-related assets and non-exclusive licenses to certain intellectual property relating primarily to Broadcom’s programmable NetXtreme II Ethernet controller family.

Total deal consideration is approximately $147 million in cash. In connection with the transaction, Broadcom and QLogic will enter into a long-term supply agreement whereby Broadcom will become ASIC supplier to QLogic in support of the NetXtreme II product line.

“This transaction is a win-win for our customers. Broadcom is focusing internal Ethernet controller efforts on strengthening its end-to-end data center platform while establishing a long-term ASIC supply relationship with QLogic in support of NetXtreme II Ethernet controllers,” said Rajiv Ramaswami, EVP and GM, Broadcom’s infrastructure and networking group. “This transaction enables customers to be served without disruption by a leading partner, allows Broadcom to provide a broader solution portfolio overall and creates value for our shareholders.“

“We are pleased to enter into this partnership with Broadcom,” said Prasad Rampalli, president and CEO, QLogic. “QLogic gains world-class technology, an immediate presence serving enterprise customer Ethernet controller needs and an important long-term partnership to deliver end-to-end solutions. Going forward, this acquisition will form the foundation of our Ethernet controller business and accelerates our time-to-market with technology.”

Concurrent with the closing, it is expected QLogic will license certain Broadcom patents under a non-exclusive patent license agreement that will cover QLogic’s FC products in exchange for a license fee of $62 million.

The transaction has been approved by the boards of directors of Broadcom and QLogic and is subject to customary closing conditions.

The transaction is expected to close in the first quarter of calendar 2014.

Excluding potential one-time gains related to this asset sale, Broadcom expects the transaction to be slightly accretive to earnings per share in 2014.

QLogic expects this transaction to be immediately accretive to revenue and non-GAAP earnings per share.