Integrated circuit maker Broadcom continued a buying spree and announced Monday that it will pay approximately $US1.2 billion in stock to acquire optical communications chip maker, NewPort Communications.
NewPort Communications is a privately held company based in Irvine, California, that makes chips that allow bandwidth expansion. Broadcom's primary business is with integrated circuits that allow broadband digital transmission of voice, video and data.
In a statement, Broadcom said the acquisition will provide the company with a broad offering of CMOS (Complementary Metal-Oxide Semiconductor) optical communication technologies for the next generation of Synchronous Optical Network/Synchronous Digital Hierarchy (SONET/SDH) and 10-Gigabit Ethernet Networks.
It also will allow the company to offer optical communication OEM (original equipment manufacturer) and laser module suppliers with a variety of optical and Wide Area Network (WAN) products, such as transceivers, framers, communications processors and high-speed serial interface devices.
NewPort Communications has strategic investors, such as Cisco Systems , Lucent Technologies and Sumitomo, and they make up the company's largest customers.
NewPort Communications was founded in 1996 by Dr. Armond Hairapetian and Lorenzo Longo.
NewPort Communications in November 1998 raised $US5 million in its initial equity offering, with Mayfield Fund and Lucent Venture Partners as major first round investors. During its second round of funding in December 1999, the company raised $US23 million.
Broadcom will issue about 5.5 million shares of its Class A Common Stock in exchange for the outstanding shares of NewPort's preferred and common stock, Broadcom said in a statement. Both companies boards have approved the merger, but it still needs to meet regulatory approval and that of NewPort's shareholders.
Broadcom shares were up by $US8.38 to $US233.43 a share in late-morning trading Monday.
On Aug. 7, Broadcom announced the acquisition of chipmaker Silicon Spice. for $US1.2 billion in stock. Silicon Spice develops semiconductor technology, software and development tools for high-density voice, fax and data packet transport over WANs. Broadcom's acquisition of NewPort Communications, if approved, would be the company's eighth of the year.